Midterm swing won’t change trajectory of US-China rivalry

American voters have spoken. In the midterm elections, Democrats won both the House and Senate in a sweeping rebuttal of US President Donald Trump’s erratic management of domestic and foreign affairs.

Despite this, the trajectory of US-China geopolitical rivalry will remain unchanged for decades, with every chance of escalation.

Foreign Affairs re-examines “The Delusions of American Power” in its latest issue. The lead article, “The Limits of American Power”, concludes that even with the strongest military, technology and financial prowess, American power will be limited by the will of its enemies, hesitancy to put troops on the ground, time and the quality of its leadership, both political and military.

Will technology be the deciding factor? Another article, “Empires of AI”, argues that while artificial intelligence is “by its nature an imperial substance”, an “empire is only as durable as its capacity to pay for itself”.

With AI “the most capital-intensive imperial project in history, undertaken by two superpowers that are already weighed down by debt”, the authors think conflict and decline are baked into the game.

I would argue that framing the contest of the century in terms of who wins or loses is too narrow. We are dealing with complex systems competing within even more multiplayer complex systems, such as climate change and global demographics, in which random or unknown factors can affect the long-term outcome.

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The global impact of the coming US midterm elections under Donald Trump

Both Karl Marx and later more cogently, Vladimir Lenin diagnosed the connection between imperialism and capitalism, offering a different analysis of the relationship between wealth and power to land, labour and capital from 19th century classical economists.

In the feudal economy, the landed gentry controlled land and agriculture through the exploitation of serfs. In capitalism, industrialists control wealth, capital and the working classes through energy and technology. Capital was the embodiment of human knowledge and technology that enabled the urban industrial class to replace the feudal powers.

Agricultural capitalism evolved into industrial capitalism, managerial capitalism, financial capitalism and, today, technological capitalism. When Tesla CEO Elon Musk can contribute nearly half a billion dollars for election funding, as reported, techno-oligarchy is on the rise.

Socialists differ from capitalists because they ideologically prefer the democratic rule of the many over the oligarchic rule of the few, and more evenly distributed income and wealth, know-how, finance and technology. The latter requires the visible hand of the state, as opposed to what Adam Smith called the “invisible hand” of the markets.

The collapse of the Soviet Union convinced many that state intervention through bureaucratic centralised planning was inept and non-viable. But China learned to adapt centralised planning to market forces and transform its economy from one of the poorest to the world’s second largest in just under 50 years.

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China’s fifth plenum focuses on discipline and loyalty to Xi

So which forms of capital ultimately determine geopolitical power? Is it physical capital, natural capital, financial capital or social/human capital?

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Geopolitical rivalry between the competing powers is been seen across many fronts: economic, technological, financial and cultural, in energy, minerals, water and across the geographies of land, ocean and space.

The war in Ukraine, conflict over the Strait of Hormuz, the arrival of cryptocurrency – these underline that energy, food, water, technology, information and money are essentially different forms of power. When weaker nations can control chokepoints, asymmetric warfare checks even superpowers.

In short, physical, natural and financial capital do not determine their own use. Social capital – in the form of institutions, ownership and governing purpose – is the agency that directs them.

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‘Socialism with Chinese characteristics’ explained

The core difference between the United States and China lies not in the quantity of capital, but in their different social architecture: who controls the social contract, towards what end and with what relationship to the technology/finance and biophysical worlds.

The competition unfolding is fundamentally a contest between two distinct institutionalisations of capital: one oriented towards private but elitist financial engineering, the other towards state-coordinated strategic engineering using market forces – each with its own strengths, contradictions and relationship to the natural world.

This definition restores the historic insight of Marx and Lenin: capital is not a thing, but a social relation – a form of organised human agency operating upon the material world. Chinese planner Chen Yun extended this by arguing that capital and markets are instrumental – neutral tools whose character and usage depend on the institutional framework within which they operate.

Social capital – in its deepest sense – is the collective human agency to choose how we deploy our physical, financial and natural endowments. The question is not which system will win, but whether either or other systems can evolve or emerge to serve the purpose of global common good better than capital accumulation itself can.