Thank God for Global Capitalism

Oil prices are gyrating and global markets are panicking as the two-week war with Iran goes badly. According to Bloomberg and the Financial Times, Donald Trump is already having second thoughts about the conflict. That development invites an unusual reaction. Thank God for global capitalism.

If the American political system cannot restrain Trump, apparently oil traders and bond markets can. Global capitalism is once again doing what the Republican Congress, American public opinion, and the U.S. electoral system have so far failed to do. It is disciplining Donald Trump. Markets are succeeding where democratic institutions have not.

We have seen this movie before. Last year Trump announced sweeping tariffs and declared what amounted to a new economic nationalism. Markets responded exactly as markets do when profits appear threatened. Stocks dropped sharply, investors fled, and within days the administration quietly rolled back much of the policy.

Capitalism spoke and Trump listened. Commentators jokingly called it “TACO Don.” Trump Always Chickens Out. But the nickname slightly misreads the story. Trump does not suddenly discover humility or prudence. He backs down because markets force him.

Now the same drama is unfolding with Iran. Trump appeared to believe the war would be easy. A few days of bombing, the regime decapitated, and grateful Iranians rushing into the streets thanking the United States for liberating them from the Ayatollah. It is the same fantasy that surrounded the invasion of Iraq in 2003, when Americans were told that Iraqis would greet U.S. troops with flowers.

Two weeks into the Iran conflict, reality has intruded again. The regime has not collapsed, regime change appears nowhere in sight, and American public opinion is skeptical while traditional allies offer little enthusiasm. None of that, however, appears to matter much to Trump. He dragged the United States into the war without Congress and without meaningful public debate.

American casualties are beginning to mount and the administration still cannot articulate what victory actually means. At times Trump hints at escalation and even the possibility of committing ground troops. Despite the mounting problems, backing down has proven difficult politically. What may finally force reconsideration is not democratic accountability but something far more powerful: capitalism.

Oil prices are rising, financial markets are shaking, and gasoline prices in the United States are climbing sharply. The stock market has slipped while unemployment edges upward, and economists are beginning to whisper about stagflation and recession. Those economic realities may be the only thing capable of forcing Trump to reconsider his adventure. Call it the discipline of capitalism.

The United States has always been intertwined with capitalism. The year 1776 produced both the Declaration of Independence and Adam Smith’s Wealth of Nations. Yet the United States also operates within what sociologist Immanuel Wallerstein called a world capitalist system. That system has its own logic and its own enforcement mechanisms.

Contrary to the mythology surrounding Trumpism, Trump is not an isolationist.  Trumpism is the highest and latest form of imperialism. Trumpism is better understood as a form of predatory capitalism on a global scale. It uses the power of the American economy and its central position in global finance to intimidate other states and extract concessions. The rules-based international order the United States helped construct after 1945 becomes something much cruder under Trumpism: economic coercion backed by military threat.

Ironically, this strategy depends on the very global interconnectedness Trump claims to despise. A truly isolationist economy could not wield the financial leverage he tries to deploy. Now that same global system appears to be pushing back. Trump’s geopolitical ambitions are colliding with the basic imperatives of global markets.

Economic historian Karl Polanyi argued in The Great Transformation that the interconnected European financial system once functioned as a stabilizing force in international politics because bankers had incentives to prevent wars that destroyed profits. Today we are seeing a similar logic at work. Global capitalism can act as a political constraint. Political scientist Charles Lindblom once described capitalism as a “great punishing machine,” one that disciplines governments that stray too far from market expectations.

Markets discipline and they punish. Push too far against the logic of capitalism and it pushes back. Investors pull money, prices surge, and economic pain spreads quickly. Call it a capitalist veto or perhaps even a capitalist coup.

Trump may now be confronting that disciplinary force. His attempt to use American economic dominance as a geopolitical weapon is colliding with the deeper imperatives of global capitalism. Over the next few weeks, we may see the familiar pattern repeat itself: markets tremble, oil prices climb, economic warnings multiply, and suddenly the White House “reconsiders.” Cue the return of TACO Don.

But again, the nickname slightly misreads the story. Trump is not chickening out. He is being forced to retreat by the logic of the very capitalist system he seeks to dominate.

The larger question remains whether he has already gone too far. Markets can discipline behavior, but they cannot easily undo the damage once instability spreads. Financial systems shaken by war do not instantly recover, nor can markets resurrect soldiers killed in a conflict launched without a clear strategy.

If this war continues to unravel, Trump will eventually need to explain the casualties and define what victory actually means. Democratic institutions have not restrained him. Congress has not restrained him. Elections and public opinion have not restrained him.

For the moment only one force appears capable of doing so.  Global capitalism.  Thank God for it.

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