Predictions may be a fool’s errand but there is always some low-hanging fruit. Democrats will sweep midterm elections, Canada’s prime minister likely obtains his coveted majority government and plastic pollution continues to worsen. Marxists understand the relatively low stakes of these surface-level tendencies. The world we are living in is one where power has long been consolidated by an elite corporate class; yawning economic inequalities and corrupted liberal democracies are only symptoms of this fact. I do not foresee any challenge to ruling class power in the near term, which means that the direction of 2026 has already been set.
For all its Trump-related pandemonium, 2025 did not really move the needle away from trajectories previously established. Inflation continued to eat away at pocketbooks around the world. Russia and Israel aggressively redrew the maps of their respective neighbourhoods. China held on to its massive gains in global exports and new technologies. The Western world, including Canada and the European Union, have once again proven politically adrift without the tide of American leadership. The artificial intelligence economy—buoying the world’s stock markets by hype—has turned flat without reaching any clear tipping point. Venezuela has invited condemnable aggression from Washington and this is the fate of any Latin American country daring to exercise sovereignty over their national resources.
With the big stories of 2025, you’ll notice there was not a lot that was new; events have all unfolded around past momentum. Even an objective change, like US tariff polilcy, has only accelerated the existing trend of Western decline relative to a rising East. Populist movements demonstrate a world clamouring for catharsis but 2026 won’t be the year to deliver it. That is because the economic forces at play tell a story of near-term easing rather than escalation. Inflation is slowing down. AI investors have begun to exercise caution amidst talk of a bubble. The prospect of a Russia–Ukraine ceasefire signal the willingness of both to prioritize economic repair over military objectives. And the erraticism of the Trump White House has only spurred China to stay its course while the West begrudgingly flounders. The fate of Venezuela’s Maduro government may be an open question but, whatever happens, it will be a movie we have seenbefore.
The tense stability which looms over the globe this January does not portend any major improvement. Financial strain, environmental deterioration, warfare, oligarchic power, political impulsivity and social unrest will all continue to simmer under the heat of the recent past. The ancient Greek philosopher Anaxagoras said that to “separate off” elements from one another takes a revolution.1 Likewise, the West will need to “separate off” its current ruling class in order to realize a change to its set trajectory. History shows us that revolutions do not occur unless class conflict reaches a raging boil. Although we will be waiting past the new year for that, let’s raise a glass to 2026 and try our best to enjoy the simmer.
Too much of the political conversation is centred around distribution. For the left, this means steeper rates of progressive taxation and social spending. For the right it is the inverse, lower taxes—particularly at the high end of the wealth pyramid—and reduced social spending. The specific rates and policies have shape-shifted over the years but this dichotomy sets the parameter of political debate in the main. But it is a shallow dichotomy which provides tremendous benefit to the economic elites because it does not lay a finger to the seat of their domination. Let’s remember, how the pie gets sliced is almost irrelevant next to who owns the oven.
If there is one Marxist teaching that is conveniently taboo in mainstream discussion, it is that wealth and power exist first and foremost as economic relations. After Jeff Bezos’ joyride into suborbital space, the first people he thanked were his employees and customers who unwittingly “paid for all of this.” Of course, if those same people had a choice as to where their generated surplus was allocated, they probably wouldn’t sign it over to the vanity project of an eccentric billionaire.
It is the economic relationship between Bezos and his employees that puts a material surplus squarely on his lap to play with. This relationship gives him command over market conditions and a vast army of labour, as well as a grotesquely outsized political sway. It is a Herculean task to pry this surplus from his lap with taxation because liberal governance grants enormous influence to “job creators” by way of the corporate lobby and political donations.
Marx said “to be radical is to grasp the matter by the root.”1 While taxation rates help to manicure the lawn, the enormity of problems posed by global capitalism demands an entire re-seeding. Progressive forces must apprehend the relations of production that first give rise to the corporate capture of government, the K-shaped economy, environmental destruction, the state of perpetual warfare. By transforming the economy from one that is authoritarian and competitive into one that is democratic and cooperative, matters of distribution and political equality resolve themselves on the new terms.
A Catalogue of Crises
Taking inventory of the problems that have plagued our capitalist society for decades, we see worker-owned enterprises (cooperatives) present themselves as a panacea. Waste and environmental decline, crisis-level mental health outcomes, community loss, job insecurity and high costs of living are a few that spring to the foreground.
On environmental outcomes, there is a structural benefit to workers owning their own workplace. The owners are not impersonal investors from gated communities afar, but members of the community in which they operate. Cooperative economic relations encourage superior environmental stewardship because worker-owners are more likely to avoid polluting their communities and the planet than impersonal investors and owners.
Multiplestudies demonstrate the pro-social tendency of cooperatives to prioritize environmental goals, reduce waste and allocate resources efficiently—especially when compared against capitalist firms. As one example, a cooperative bank in the UK was able to reduce downstream emissions of clients by 70% by providing financing for renewables, energy efficiency upgrades and carbon offsets.2
In terms of mental health and community, the accelerated decline of both are not unrelated. It should be no surprise that a chronically-online society increasingly devoid of face-to-face interactions is manifesting symptoms of a “loneliness epidemic,” negatively affecting local communities and individual well-being. The negative mental health symptoms we observe today validate the psychoanalyst Erich Fromm’s five fundamental needs for mental well being: relatedness, rootedness and unity, transcendence, sense of identity and frame of orientation.
Because of democratic decision making and a shared destiny amongst stakeholders, cooperatives offer the individual a community unto itself and create a vested interest in civic participation, addressing each of Fromm’s fundamental needs. The superiority of this model compared to capitalist corporations is reflected in higher rates of job satisfaction and happiness at work. At a national scale, widespread adoption of the cooperative model would enhance social cohesion, community engagement and improve productivity.
Artificial intelligence and automation are frequently cited as factors aggravating conditions of employment insecurity and precarious work. Productive technologies should not be feared, though. Workers that own their firms are incentivized toward technological efficiency and practical AI deployment because it saves labour time without impacting income. There is a longstanding capitalist contradiction regarding technological progression: employers covet it for the productivity gains, employees fear it over the ensuing layoffs. When employees become owners, this contradiction is resolved.
Furthermore, worker cooperatives have demonstrated greater staff retention and job security, even in times of economic recession. Whereas capitalist firms often have an express fiduciary duty to prioritize the interests of the investment class over their workers, worker-owners are far more likely to set funds aside in periods of strong economic performance in order to stabilize incomes during periods of weakness. The structural difference between conventional corporations and cooperatives also sees workers accrue greater employment benefit coverage for their families and up to 80% above-market pay. A comfortable living wage is the demonstrated norm in mature cooperative formations.
In one stroke, the cooperative model alleviates almost all of the civilizational problems pressing so hard on us today. Even political polarization, drug addiction and crime could be expected to crash downward with increased community building, financial security and social cohesion amongst the population. Rather than pitch socialism as a stoic alternative, cooperatives offer a visible pathway to transcending capitalism altogether; a world where wage labour is viewed as dimly as serfdom or slavery is right now.
Laying the Soil
But it is never so easy. For the apologists of capitalism, the usual retort is something along the lines of: “Nothing is stopping the formation of cooperatives right now. The market will decide if they are the superior model or not.” This falsely assumes some kind of fair marketplace where the best ideas, products and formations inevitably rise to the top. In reality, we live within a global system that doles out multi-trillion dollar subsidies to capitalist firms each year. Publicly funded and well-endowed schools of commerce glisten on campuses wherever a university is to be found. Banks raise low-interest debt and investment for hedge funds and publicly-listed companies, while giving relatively draconian terms to small businesses—and even worse for cooperatives, which are often denied loans.
Rosa Luxemburg described cooperatives as “small units of socialized production within the midst of capitalist exchange.”3 Worker owned enterprises must compete with conventional firms in the capitalist market but they do so with far less tools at their disposal. While they offer enormous pro-social and environmental benefits, this does not count toward GDP or rate of profit—the only measures of capitalist value, even in a world on fire.
The struggle to breathe under an avaricious economy thirsty for profit account for many of the shortcomings of the cooperative movement, including cases where wage labour and outsourcing is resorted to. But this does not mean cooperatives are a dead-end, they just have the wrong substrate. The history of capitalism, too, is pockmarked by failed attempts of merchant-run cities and bourgeois revolutions to shed their aristocratic chains, only to lose momentum and become subsumed again by dominant feudal relations.4
Socialism will transcend capitalism in the West when a future revolution applies the lessons of China’s nation building state-owned enterprises and public planning; when the unimpeded direct democratic rule of the people has been won. Once community and environment take their place among the measures of wealth, new economic relations between associated producers and consumers can be organized. As Karl Marx said:
If cooperative production is not to remain a sham and a snare; if it is to supersede the capitalist system; if united cooperative societies are to regulate national production upon a common plan, thus taking it under their own control, and putting an end to the constant anarchy and periodical convulsions which are the fatality of capitalist production—what else would it be but communism, “possible” communism?5
Thanks for reading!
Footnotes:
Karl Marx: Selected Writings, Second Ed. trans. David McClellan (Oxford University Press, 2000): 77. ↩︎
Melissa Scanlan, Prosperity in the Fossil-Free Economy: Cooperatives and the Design of Sustainable Businesses (Yale University Press, 2021): 261. ↩︎
There must be no doubt that the transformation of constitutional conservatism into a politics of populist reaction is attributable to the rapid societal changes of the past two decades. The ubiquitousness of smart phones, the totality of social media information, the sharp visibility of immigrant and LGBT populations, cultural backlash against perceived “woke” authoritarianism and the economic tumult of subprime mortgages and COVID have all contributed to this transformation. Throw in several years of historic inflation and the world now sits in the barrel of a second Trump presidency, much more aggressive than the last.
For the Marxist school, Trump’s re-ascendance was mighty predictable. Within the milieu of the aforementioned social changes, we have artificial intelligence revaluing labour and China revolutionizing global trade and renewable energy and “people seem to be occupied with revolutionizing themselves and things, creating something that did not exist before.” According to Marx, it is in times like these when many people “anxiously conjure up the spirits of the past to their service, in order to present this new scene in world history [with] time-honoured disguise and borrowed language.”1
The early returns of the second Trump administration have given us time-honoured symbolism in spades—military parades, the return of Mount McKinley and the freshly minted Gulf of America. The mass deportation orders are an echo of Eisenhower’s cringily-named “Operation Wetback” and Trump’s economic policy rests on an antiquated foundation of import duties, also known as tariffs.
Past and Present
American tariffs on imports now reach heights not seen in a century and this is very on-brand with Trump’s glorification of the past. 100 years ago, tariffs were a staple of independent governments looking to do two things at once: efficiently collect tax revenues at shipping ports while sheltering burgeoning industries from outside competition. Generally speaking, items that could be supplied domestically were subject to a tariff, while important raw materials supporting other industries might be exempt. Then came the Smoot-Hawley Act of 1930 that blanketed imports with an effective tariff rate of 47%. This sparked a global retaliation that froze international trade just as the West entered the Great Depression. The presidential administration of Franklin Delano Roosevelt began winding down many of these tariffs through bilateral deals shortly after taking office—but with so little capital circulating after a period of deflation, the harmful effects did not really reverse until the conclusion of World War II. From that point onward, the United States promoted a low-tariff, liberalized trade regime between capitalist countries.
The American posture on liberal trade was upheld through successive administrations but the current Trump White House has folded it in dramatic fashion. But how do these tariffs stack against the historical record?
We can see that the earliest application of tariffs were used to efficiently gather taxes at ports without the need for a sophisticated bureaucracy capable of calculating sales and income taxes. These tariffs do not appear to have had any disastrous consequences for the economy at the time—bearing in mind that this economy was much more simple and agrarian compared to today. Under the Smoot-Hawley Act, the American economy was much more industrialized and complex compared to years prior, and the tariffs were much steeper. It is seen as disastrous but only in hindsight; during the desperation of economic depression, throwing up a barrier to the outflow of capital made intuitive sense.
Trump’s rapidly evolving tariff regime does not overlay neatly on either of these historical examples. On the one hand, the effective tariff rate at the time of writing is 18.6%—quite mild compared to the Smoot-Hawley rate of 47%. On the other hand, the American economy is more complex than ever, with commodity production and financial capital often crossing dozens of borders before valorization. In the simple, low-tax colonial economies that were developing in the Americas over a century ago, tariffs were not so imposing. But dropping duties onto supply chains that were established during an era of liberalized trade is bound to cause blockages to the existing circulation of productive and financial capital. This will suppress consumption but the full extent remains to be seen.
A novelty between past tariff regimes and the Trump tariffs is the strategy inherent to each. Trump’s tariffs do not seem to amount to any sort of regime or logic—there is clearly an impulse to apply them universally, but the rates are up and down on a whim. Canada is threatened with tariffs over plans to recognize a Palestinian state. Brazil gets slammed with a 50% rate for court proceedings against the former president. India, likewise, is slapped with an identical 50% rate for buying Russian oil—while Russia’s other customers in Europe and China receive no consequences. Resulting is a geopolitical shot string, and the consequences to American hegemony will take years to reckon with. Suffice to say, the only constancy to Trump’s approach is uncertainty itself—and that’s the one thing multinational conglomerates and their army of lobbyists loathe.
Why Tariffs?
But Trump, consummate capitalist that he is, would not maximize market uncertainty or collapse American hegemony or create capital blockages and suppress consumption intentionally. In fact, the Trump White House believes that tariffs will have the opposite effects from those listed here: capital will consolidate at home, jobs and domestic consumption will boom and American hegemony will rejuvenate, the world dancing to Washington’s ultimatums, the market nurtured under the eagle’s wing. So how does this play out?
As with most everything concerning the motion of capitalism, Marx and Engels addressed thisquestion of duties back in the Victorian era. Engels:
Protection is at best an endless screw, and you never know when you have done with it. By protecting one industry, you directly or indirectly hurt all others, and have therefore to protect them too…By taxing raw materials, it raises the price of the articles manufactured from them; by taxing food, it raises the price of labour. In both ways, it places the manufacturer at a disadvantage compared to his foreign competitor.
We see this observation playing out in real time. Food costs are up over the early months of the Trump administration and will increase further with tariffs. Producer inflation is soaring as the cost of economic inputs rise. Automakers are shedding billions, largely due to tariffs on necessary steel and aluminum. For the crown jewel in American capitalism’s catalogue of death—the F-35 stealth fighter—prices have rocketed upward thanks to the higher cost of raw materials. No sooner does Trump clamour for weapons sales and he raises the price of everything across the entire defence industry!
Marx, likewise, saw free trade as hastening a country’s “accumulation and concentration of capital” with workers being hurt by “greater use of machinery” in production. What this has meant for the United States is a bloated credit and debt system, a largely automated manufacturing sector and an abundance of monopolistic financial firms and multinational conglomerates that export their capital around the world looking to realize profits in the American market. It’s as if Trump’s tariffs are meant to throw wrenches into the wheels of the economy that are turning well, while doing nothing to jumpstart the others. The motivation for American protectionism is similar to what Engels described in England in 1888: “She is relatively losing ground, while her rivals are making progress.” America is losing its sole superpower status and “it is to stave off this impending fate that Protection, scarcely disguised under the veil of ‘fair trade’ and retaliatory tariffs, is now invoked with such fervour.”
Wither the Empire?
When Trump opened a trade war against China during his first term, the Chinese looked outward. Since U.S. tariffs came into effect in 2018, the value of Chinese exports has increased by 50%, they became the top automotive seller in the world and they are the top trading partner to 150 countries. Now that Trump has launched a trade war against the entire world, China sees an even greater opportunity. They have unilaterally implemented a zero-tariff policy for all of the world’s least developed countries plus the entire continent of Africa. As students of Marxian economics, China has taken steps to suppress the financial capital system that has ravaged the American Main Street, instead directing investments into the productive sectors of their economy and expanding its global Belt-and-Road Initiative. China has made moves to bolster trade with India, Vietnam, the European Union and Britain, while strengthening relations with Latin America and the rest of the Global South. Renewable energy and automation technologies—key pillars of a future socialist economy—are progressing at rapid speed. China is almost single-handedly lowering global emissions while the West languishes under the shock of American protectionism.
What are the future results of Trump’s tariffs? We will not know in the near term. Trump may not even live long enough to find out. But he probably won’t like the answer.
Thanks for reading!
Footnotes:
Karl Marx, The Eighteenth Brumaire of Louis Bonaparte. ↩︎
It was Aristotle who first observed that civilization does not really begin until an economic surplus is produced by one class for use by another—a point taken up by Karl Marx and Friedrich Engels in the opening line of The Communist Manifesto: “The history of all hitherto existing society is the history of class struggles.”1
Without slaves and masters, plebeians and patricians, serfs and lords, workers and capitalists, then systems of writing, military, philosophy or political authority could not have been developed and expressed by civilization. While a surplus depends on a labouring majority of the population to produce it, throughout history it has been captured by a minority of ruling class elites who have used it to entrench authority. The struggle over production and control of this surplus is known as class conflict and it manifests itself in myriad ways—terms of interest and debt, governmental leadership, monetary policy, the dictatorship of the workplace, cost of education and healthcare, decisions regarding the social safety net, access to home ownership and the rights of tenants, etc. It is within this confrontation between elites and the labouring masses that all political decisions are made and social direction is taken.
Class systems, while persistent and stubborn, have no basis in nature and present themselves as an obstacle to harmonious living. This is why both Thomas Jefferson and Jean-Jacques Rousseau believed indigenous societies provided more happiness and social stability to their members, as fruits of labour were democratically allocated and law was a matter of popular opinion instead of a violently-enforced dictate by one class onto another. Marx writes:
One thing, however, is clear—nature does not produce on the one side owners of money or commodities, and on the other, men possessing nothing but their own labour-power. This relation has no natural basis, neither is its social basis one that is common to all historical periods. It is clearly the result of a past historical development, the product of many economic revolutions, of the extinction of a whole series of older forms of social production.2
As discussed in the article on capitalism, it is only when the capital owner meets in the marketplace those with nothing but their labour to sell that the capitalist mode of production is born. From this point onward, workers and capitalists are locked into an interpenetration of opposites and go on to supplant the previously dominant lord and serf class relation in Europe before conquering the globe. Prior to the Industrial Revolution, proto-capitalism could only be concerned with looting existing riches from the technologically disadvantaged. And while the coercive elements of capitalism have never disappeared, it did manage to become a mode of production in its own right—the most productive to ever exist—owing to the unlocking of resources on a massive scale, subsequent technological innovation and the forceful drawing of an urban wage labour pool from the countryside. The latter is a process still underway in many less-developed parts of the world.
Like feudalism and the slave economies of antiquity, multiple classes exist along the base and superstructure of capitalism: bureaucrats, intellectuals, media personalities, contractors and soldiers exist alongside destitute slum-dwellers, drug addicts and the fully homeless. But the employer–employee relation is dominant because it enables vast wealth and power to concentrate in few hands and produces almost every available good and service for consumption. These two classes are inter-dependent, they cannot exist without the other and yet they possess contrary material interests: the employer wants to keep wages paid for labour time as low as possible, while the employee wants the opposite. Owing to this contradiction, capitalism has witnessed a succession of struggles over union-organizing, outsourcing of jobs to cheaper, less-regulated countries and political conflict at the state level over public benefits and investment.
Consciously recognized or not, class conflict between employers and employees provide much of the friction that animates our politics, society and individual lives. Despite the inter-dependence of these two great classes, the power imbalance clearly favours capital owners. While an employer may choose to hire a worker to assist in generating profits, the employer will have many prospective employees to choose from and, in any case, does not need any specific worker in order to survive. This is not true for the worker, who must find employment to survive and will have far fewer employment prospects available to them than an employer will have prospective employees. In other words, as presently constructed, the capitalist class needs the working class to create value but the working class needs the capitalist class to actually survive.
This power imbalance that exists at the economic base of capitalism likewise manifests in the superstructure. Whereas the Catholic Church played the dominant role in mediating class relations and asserted the nobility’s “divine right to rule” during feudalism, it is the state that performs this function in capitalism. As the locus of production shifted from farmlands and enslaved populations toward a global web of resource extraction and colonial markets, a robust state apparatus in the service of the capital class became necessary to ensure the protection of property throughout the supply chain:
State formation and the origins of financial capitalism were closely connected, and this nexus provided a way for prosperous urban citizens in high finance, a small elite, to establish their influence on politics while simultaneously making their entrepreneurial success dependent on powerful rulers and their shifting political fortunes.3
It is through the capitalist state apparatus that much of the world became exploited as colonies or subjugated by unequal treaties in the service of investment. It is through this state apparatus that great wars over resources and markets are fought, where great masses of debt are leveraged, where prisons are filled, where school curriculums are devised, where infrastructure projects are authorized, interest rates are set and budgets are formed. All of this is carried out under the direction of elite stakeholders, while the public is only roused to “vote” every so often for this-or-that corporate-backed political party. Since this vote is the only meaningful say that the public has in its own politics, Emma Goldman adroitly observed: “If voting changed anything, they’d make it illegal.”4
If the state were in the hands of the public, it would be unlikely to mediate class conflict in the interests of capital owners. But in the hands of financial capital, the state has the unique ability to socialize costs and privatize profits. For example, the 2003 invasion of Iraq was funded largely by debts leveraged against the American taxpayer and fought with the bodies of working-class sons and daughters. Meanwhile trillions of dollars of public money disappeared into the pockets of bondholders and the CEOs of defence contractors. Another example was during the COVID-19 response when central banks around the world acted in unison to eliminate interest rates and prop up stock market assets by printing money at a time of mass lay-offs and restrictions on movement for the non-yacht owning public. In the aftermath, it is no surprise that the capital owners came out wealthier than ever before while the global working class suffers crippling inflation and a punitive cost of living. This is the capitalist state working as intended—socializing costs and privatizing gains—and this service is the chief reason why “a stateless capitalism is unthinkable.”5
From its outset, capitalism was predicated on the violent destruction of traditional societies, the coercive acquisition of wealth, class conflict, environmental ruination and reinventions of production in the interest of profit. These core characteristics have hardly changed. Workers and consumers alike are powerless relative to the capital-controlled market, and the state is in the hands of those same elite interests lurking behind every crisis, making a serene life on this Earth nearly impossible. While capitalist technology has given humanity the tools to solve economic scarcity, employing them in a socially and ecologically harmonious way is stonewalled by a state of class contradiction. Class consciousness describes the active decisions of one class to pursue their interests by state capture and force. The economic elites have accomplished this. But there is an emerging consciousness bubbling under the surface of digital connectivity, a new language developing in the full sunlight of existing oligarchy. Once working class consciousness has crystallized, the construction of a new, liberatory government may commence.
