The post-war promise that markets would sustain democracy has collapsed into a system of concentrated wealth, eroded trust, and geopolitical fragmentation.
The world is living through a rupture, not another political cycle. The assumptions that guided Western politics since 1945 – that capitalism and democracy reinforce one another, that globalisation is irreversible, that rules restrain power – are breaking down.
For seventy years, the liberal order offered a simple promise: markets would generate prosperity, democracy would confer legitimacy, and global integration would make both irreversible. That faith has collapsed. What was once an order built on shared rules has become a contest of power blocs. Multilateral institutions – from the WTO to the UN – are being bypassed by executive decrees, tariffs and geopolitical coercion. The age of certainty is over.
At the root of this collapse lies the disintegration of the social contract that once aligned economic growth with democratic legitimacy. For much of the twentieth century, the formula held: economic growth produced tax revenues, which financed welfare states and sustained a broad middle class. That middle class, in turn, underwrote democracy’s stability. But in the past four decades, this virtuous circle has unravelled.
Globalisation lifted hundreds of millions out of poverty, especially in emerging economies. Yet within rich democracies, it mostly rewarded those already at the top – the asset-owning, the globally mobile, the highly-skilled, and the politically connected. Capitalism ceased to be a system of production and became one of extraction.
In the United States, the epicentre of global capitalism, the transformation is stark. Since the 1980s, the wealth share of the richest one per cent has overtaken that of the entire middle 40 per cent. Half the population now owns almost nothing. The same pattern holds for profits: the top 10 per cent of US corporations capture nearly all after-tax earnings, and the top 0.1 per cent – just 10 corporate groups – dominate the landscape.
This is not competitive capitalism; it is hierarchy. The post-war model of liberal markets has mutated into a system of corporate pyramids and monopoly power. Profit concentration drives wealth concentration, which captures politics in turn. The feedback loop is self-reinforcing: corporate profits create fortunes, falling taxes preserve them, and concentrated wealth shapes policy to protect itself.
When citizens see this rigged system, they cease to believe that capitalism and democracy can coexist. The loss of trust – more than inequality itself – is the real shockwave of our age. It marks the moment when capitalism’s promise of shared prosperity broke faith with democracy’s demand for legitimacy.
Out of this fracture has emerged a new political coalition: the super-rich and the left-behind. It is a remarkable and dangerous alliance – resentment from below, financed from above. Authoritarian populists such as Donald Trump have channelled economic anger into cultural grievance, turning disillusionment with globalisation into a movement that protects wealth while denouncing elites.
Trumpism is not an aberration. It is the political expression of winner-takes-all capitalism — a revolt against liberalism’s economic contradictions. The old liberal order preached open markets and free trade; its outcome was concentrated power, stagnant wages and hollowed-out democracies. When that bargain collapsed, populism rushed in to fill the void.
The geopolitical consequences are now unmistakable. We have entered an era of strategic rivalry and geoeconomic fragmentation. The US, China and Europe no longer operate within a shared liberal framework; they are competing to rewrite it. The pursuit of profit and the projection of state power have fused into a single logic.
In Washington, national security and industrial policy have replaced market liberalism as the organising principles of economic life. Under Trump, protectionism is cast as patriotic economics; under Biden, industrial policy was climate strategy. Both parties now agree that the state must act – they simply differ on whose interests it should serve.
In Beijing, state capitalism is not a deviation but the model itself. China directs credit, controls strategic industries and exports its developmental blueprint to the Global South. While the West quarrels over tariffs and ideology, China offers continuity and capacity. It has turned effectiveness – the ability to deliver – into a new form of legitimacy.
The liberal West, by contrast, faces a dual erosion of state capacity and social trust. Governments have rediscovered industrial policy but lack the institutions to deliver it at scale. They seek to restore control over supply chains while remaining captive to the same domestic inequalities that undermined legitimacy in the first place.
The new world disorder is not marked by the retreat of the state but by the fusion of state and corporate power – a system of strategic protectionism abroad and oligarchic capitalism at home. It is a world where the tools of industrial policy are deployed to entrench the very hierarchies that triggered the crisis.
Liberalism is being undone by its own inequalities. The global economy that once promised peace through prosperity now produces rivalry through resentment. The challenge for democracies is not simply to manage global competition but to rebuild the social foundations of legitimacy at home.
The end of certainty does not have to mean the end of progress. But it does require honesty about what went wrong. When capitalism serves elites rather than citizens, populism becomes democracy’s revenge. Reuniting prosperity with legitimacy – capitalism with democracy – is the central task of our age.
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