On the eve of the federal election, it is apparent that the only moment Australian politicians are capable of meeting is the last twenty-four hours of the daily news cycle. But then I (and perhaps you) have also been struggling to comprehend the moment in which we and the rest of the world find ourselves. The rush of seismic events during the last six months has been overwhelming and disorienting. Nor has the Anglosphere media’s fragmented and selective coverage of these geopolitical shifts been much help in clarifying why they are taking place and how best to respond to them.
In short, it’s very hard to meet the moment if you’re unable to define and understand it. But the tumultuous advent of Trump 2.0 provides a powerful incentive for us to do so.
That is why I welcome the recent English translation of German sociologist Wolfgang Streeck’s Taking Back Control? States and State Systems after Globalism. Written before Trump’s victory in last year’s election, it offers a comprehensive, coherent and compelling account of how the world has arrived at this moment and how we can make the most of it. More specifically, Streeck believes that democratic nation states like Australia have an historic opportunity to stage an orderly retreat from both neoliberal globalisation and our strategic reliance on the United States.
How we got here
Taking Back Control takes as its subject “the political economy of neoliberalism and the global state system of the New World Order” since 1989, with a special focus on the European Union. This was the period when the United States momentarily became the world’s only global superpower, the EU grew more centralised, and capitalism emerged as “the only surviving form of political economy.” Far from being “the end of history,” though, the “neoliberal moment” has proven to be a shortlived affair.
In Streeck’s view, what drove this era of hyperglobalisation was the hegemony of an imperial nation state bent on opening up the world to its gigantic multinational firms and rampaging financial sector. In its endeavour to establish “a denationalised world market with a uniform set of [neoliberal] rules,” the United States was able to deploy formidable resources: its dollar as the de facto world currency; its unrivalled military power and far-flung alliances; its universities as the engine room of the global knowledge industry; and, not least, its influence over the World Bank, International Monetary Fund, and the World Trade Organization.
This American effort to displace “nation states from their position as masters of their domestic and external economies” also found increasing support beyond the United States — especially in Europe — from major trading partners, mainstream political parties and media outlets, corporate and intellectual elites, and, not least, EU commissioners and bureaucrats. The embrace of this neoliberal consensus by centrist parties of both the right and the left not only relegated its critics to the “populist” fringe but increased the control of the European Commission and the European Central Bank over the affairs and destinies of their member states as well.
Hyperglobalisation’s balance sheet
As the world reels from Trump’s upending of the American-created “rules-based order,” many are already regretting its dismemberment. But, as Streeck insists, an honest appraisal of what the era of hyperglobalisation has wreaked on the world — including the United States itself — ought to dispel any lingering nostalgia.
For a start, “there was not a single day during the New World Order’s lifetime when… the United States was not at war, in a protracted effort to wipe out growing resistance… against inclusion in [its] global empire.” With one notable exception, none of these American engagements had the backing of the UN, largely relying instead on NATO. These conflicts came at the cost of tens of thousands of lives, trillions of dollars of debt, and greater destabilisation of the regions in which they were fought.
The neoliberal order also witnessed a succession of political-economic shocks, culminating during the Covid pandemic in “the biggest collapse of the accumulation process in the history of capitalist crises” and a significant spike in inflation. These episodes cast doubt on the capacity of both econocrats to manage and avoid such upheavals and governments to deliver essential benefits and services to their citizens. In the ensuing “revolution of sinking expectations,” doubts have begun to rise about neoliberalism as the one and only regime that could underpin the political economy of a globalised world.
While world trade, GDP and asset prices were all far greater in 2020 than they had been thirty years earlier, the rewards of such growth in “the West” flowed disproportionately to big corporations and the very rich. Along with the stagnant growth of workers’ real wages in an increasingly de-unionised labour market, these rising inequalities became a central cause of slowing growth rates in most “advanced” economies. “To put it simply,” Streeck declares, “without trade unions, no mass purchasing power; without mass purchasing power, no investment.”
The centrist parties of the right and left — which had previously upheld the postwar promise of economic and social progress — also embraced the neoliberal moment, losing control of their national economies, and winding back workers’ rights and social benefits. Having abandoned their pursuit of “a collective social ideal” appropriate to their respective nations, these mainstream parties now limited themselves to pursuing “a succession of pragmatic, short-term reactions to constantly and unpredictably changing market conditions.” The result was “the steady erosion of their established supporter bases.”
An additional problem for large, centralised nation states like the United States or “state systems” akin to the European Union has been the management of regions or nations where either the “losers” of hyperglobalisation were concentrated and/or their political and cultural traditions no longer aligned with the neoliberal, more cosmopolitan worldview of the elites who controlled the centres of power. The regional schisms in the United States, Britain, Spain and Germany have all given rise to movements focused on defending these regions’ divergent economic interests and cultural identities.
Hence, Streeck concludes, it was inevitable that those underrepresented in Berlin, Brussels, London, Paris or Washington would begin to seek “populist” political parties “oriented towards a nationalism of the right or the left.” Trump 1.0 was one expression of this impulse. Another was the increasing popularity of authoritarian right-wing parties within the European Union. In Britain, the desire to “take back control” from the Brussels commissars was strong enough to secure the nation’s complete secession from the EU state system.
By the end of 2024, the net effect of all these developments was that the greatest proponents of hyperglobalisation in the European Union and the United States found themselves locked in a stalemate with those seeking to reassert their regions’ or nations’ neglected interests. This “interregnum,” as defined by Antonio Gramsci, is “a condition in which an old order is dying but a new one cannot yet be born.” As long as it persists, we must expect the appearance of a great variety of “unexpected, structurally undetermined, critical events that lead to a loss of normality and social order.”
The biggest winners
Ironically, it was China and Russia — respectively the United States’s and European Union’s most significant strategic adversaries — that would emerge as the biggest winners from the US-proclaimed and EU-supported New World Order.
Russia’s rise from the ashes of the Soviet Union was perhaps the more unexpected, given its parlous economic state during the 1990s when it was firmly in American hands. At the same time strategic insult was being added to economic injury with the United States’s push to expand NATO to Russia’s borders. This was the background to Putin’s mission “to restore something like statehood internally and great power status externally.” By subsequently becoming one of the world’s largest oil and gas suppliers — notably to the rapidly expanding European Union — Putin now had the resources he needed “for rebuilding [Russia’s] capacity to project power internationally.”
By contrast, the United States played a far more benign role in midwifing China’s phenomenal transformation into America’s most powerful competitor. “Chinese exporters were allowed unlimited access to the American market.” In return, China became an extended workbench for firms like Apple, which supplied hard-pressed working class Americans with an unending and very welcome supply of relatively cheap consumer goods. The United States also shepherded Beijing into the WTO.
China then used its trade surpluses to underwrite massive overseas investments that served to increase its political influence in the Global South. While the European Union, United States and NATO were bedding down the New World Order in Europe, China — with Russia’s active support — was casting a far wider diplomatic net by engaging Brazil, India and South Africa in the formation of the BRICS. This new international consortium includes many of Africa’s, Asia’s and South America’s most powerful nations.
So, thanks to the role America allotted to China in advancing the neoliberal hyperglobalisation project, we have two superpowers and live in an increasingly multipolar world.
The New World Order’s last hurrah was the Russo-American war in Ukraine. Without litigating its causes and conduct, its long-term consequences for the European Union were already self-evident to Streeck while writing Taking Back Control.
First, the European Union became even more “dependent on the bizarre domestic politics of a declining great power, readying itself for a global confrontation with a rising great power, China.” Yet, Streeck lamented, “nowhere in Western Europe today is the question seriously being asked what will happen if Donald Trump is re-elected in the 2024 presidential election.”
Second, following its dramatic expansion to Russia’s borders over the last two decades, the EU’s Eastern-front states were now likely to “dominate [its] common political agenda. In this [way], they will be supported by the United States, with its geostrategic interest in keeping Russia politically, economically, and militarily in check and isolated from Western Europe.”
Third, even before Trump’s re-election, the European Union was obliged to undertake a substantial remilitarisation that put greater fiscal demands on its member states, who were already struggling to renew aging infrastructure and stimulate economic growth. By further centralising the European Commission’s power over its members’ affairs, the European Union’s rearmament will also increase existing tensions with those nations/regions seeking greater autonomy from Brussels.
Fourth, nowhere will these pressures be felt more greatly than in Germany which, Streeck predicted, would be “left holding the bag” for keeping “the Ukrainian state and its government alive in its confrontation with Russia.”
Where to from here?
While some might read Streeck’s litany of past neoliberal crises and cul-de-sacs as presaging an even more dismal future, he believes they offer both an opportunity and a compelling case to begin deglobalising “systems of production and reproduction, not just within but also, perhaps, beyond capitalism.”
His call to action is underpinned by “the rise of China as a geopolitical rival to the US,” which “has finally rendered utopian any idea of global governance in a world-spanning Western capitalist empire, with the US at its centre.” The arrival of Trump 2.0 — of which more later — has only served to bolster this observation.
Streeck’s highest priority is for nation states to begin staging an orderly retreat from hyperglobalisation by reasserting their sovereignty and strengthening their democratic institutions, thereby becoming “a countervailing power rather than a subordinate sideshow of modern capitalism.” The question is how might states and their associated state systems re-form themselves to achieve this ambitious outcome?
Strengthening democratic nation states: Drawing heavily on the political writings of J.M. Keynes and Karl Polanyi, as well as contemporary social and economic theorists like Amitai Etzioni and Dani Rodrik, Streeck sets out guiding principles rather than detailed blueprints — much less predictions — about how such a transformation might be achieved. Whatever form it takes, it will be the work of countless localised experiments over several decades.
The overriding aim for Streeck is for nation states to achieve greater autonomy from neoliberal capitalism by increasing their economic self-sufficiency. Here he draws on Keynes, who acknowledged in 1933 that his sympathies lay with “those who would minimise… economic entanglement among nations. Ideas, knowledge, science, hospitality, travel — these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national.”
Streeck then highlights nearly a century later five areas where democracies need to reconsider how and to what extent they want to embed capitalism in their internal economies. They should make efforts to shorten supply chains and “reshore” systems of production, especially of indispensable goods; commit to “economic patriotism” and even protectionism, which will require a national industrial and regional policy; shift economic policy towards domestic production for domestic consumers; bolster the foundational economy that provides “the collective goods enabling people to live normal lives in a modern society”; and create their own “patriotic” capital, bypassing global capitalism or acting beneath its radar.
Obviously, Streeck concedes, enacting such an agenda would require nothing less than a project of radical democratisation. But the rewards of doing so, again recalling Keynes, would be for democratic nation states “to liberate themselves from the dictatorship of the lowest marginal cost and cheapest price for the sake of non-monetary values… such as the minimisation of collective external dependency or the preservation of a minimum of social stability and continuity.”
Establishing complementary state systems: In a highly globalised world, nation states are inevitably interconnected economically and strategically through state systems based on a range of bilateral, regional and international agreements and strongly influenced by their relationship to one or more hegemonic powers. What new types of state systems might best allow more democratic and economically self-sufficient nations to flourish?
Here Streeck harks back to Karl Polanyi’s hope at the end of the second world war that “a new era in internationalist politics” could emerge, based on “a regionally subdivided world system characterised by diverse modes of decentralised government.” But, as Polanyi recognised and soon became evident in the cold war, the precondition for this diversity of political and trading arrangements was the absence of a superpower determined to superimpose its economic worldview and trading regime on its allies and neighbours.
Now, for the first time in eighty years, a space has opened up for nation states to chart a more independent course in establishing their priorities and international relationships. Why? Because, in Streeck’s view, we no longer need “to worry about the peace-endangering, capitalist market-economic expansionism of the United States, as Polanyi did in 1945.” That’s partly as a result of the rise of China, a competing superpower without “a missionary need to universalise its social order.” It’s also because, as Streeck believed even prior to Trump 2.0, “the US may be busy in the years ahead with the restoration as far as possible, of its broken society. This will force it to curtail its imperial ambitions and the global presence they demand.”
He therefore concludes that “now is the time to take a deep breath and develop tolerance for the vision of a multipolar globalisation architecture … which accommodates a variety of world market engagements.” This will mean, as Dani Rodrik has noted, a more general recognition that
capitalism does not come with a unique model. Economic prosperity and stability can be achieved through different combinations of institutional arrangements in labour markets, finance, corporate governance, social welfare, and other areas. Nations are likely to — and indeed are entitled to — make varying choices among these arrangements, depending on their needs and values.
By freeing up nation states to decide these choices in conformity with the aspirations of their citizens — and tolerating the different paths other countries might take — Streeck believes the world can eventually break out of the paralysing “interregnum” in which we are currently stuck.
Global problems? But if the “cornerstone of a post-neoliberal international order is the nation state,” how will it deal with such global challenges as climate change, pandemics, wars and mass migrations of refugees? Would a system of more widely dispersed “democratic sovereignty” be any more capable than the American-contrived “rules-based order” in corralling these new “horsemen of the apocalypse’?
Streeck’s response is to suggest the challenge of generating international solidarity on any of these fronts will remain anchored, then as now, “in the domestic politics of its member states, where it must prevail democratically and by which it must be supported.”
Taking the example of climate change, he notes that Barack Obama’s approval of the Paris Agreement “had no impact within the [US], because it had neither a popular nor an electoral basis.” That is why it became and remains such an easy target of Trump’s climate-denialism.
How then, Streeck argues, can anyone “present any convincing arguments in favour of global governance and [America’s] own leading role in it” when its political class is unable or unwilling to “convince its society that anthropogenic climate change exists’?
By contrast, American cities and states that committed themselves to becoming climate neutral or carbon-free have done so as part of a democratic response to a growing desire on the part of their citizens and social movements to do the right thing for the planet. “What others do is irrelevant; it is enough to… set an example.” In Streeck’s mind, these are exemplars of what more democratically engaged nation states might achieve — either on their own or in concert with other like-minded countries — in tackling global issues often far removed from more immediate local or regional concerns.
Making sense of it all
The strength of Streeck’s work is that it provides a broader European social and intellectual framework not only to make sense of world history since 1945 but also to provide a way out of the interregnum — the democratic stalemate — in which we find ourselves. Apart from occasional lapses into jargon, he follows the maxim attributed to Einstein of explaining things as simply as possible and no simpler. In other words, Streeck forces the reader to think hard, indeed rethink many of our taken-for-granted assumptions about what’s been happening, especially during the neoliberal moment of the past three decades. But, believe me, it’s worth the effort.
One test of his arguments and advocacy is to see how well they have stood up in the wake of Trump’s whirlwind return to the Oval Office. Another is to assess their relevance to the circumstances of a country far removed from Streeck’s homeland and the EU state system in which it is embedded.
In Taking Back Control, Streeck foreshadowed Trump 2.0’s aggressive assertion of American sovereignty and economic nationalism, coupled with his abandonment of “entangling alliances.” So he would not have been wholly surprised by Trump’s autocratic and disorderly implementation of Project 2025’s plan to walk away from the neoliberal world order which America had created. Why then have we here in Australia been so shocked by the president’s blizzard of executive orders, many of them enforced by Elon Musk and his DOGEmen?
As it happens, the strategy underlying Trump’s tariff wars partly reflects Streeck’s encouragement of greater economic self-sufficiency. What’s missing is any intention to shore up the “foundational economy” — health, education, infrastructure — through public investment.
Far more expected has been the president’s trashing of the previously declared “rules-based order,” in favour of a multi-polar world in which the United States, China and the European Union will become the uncontested hegemons of their respective spheres of influence. In America’s case, Trump has reasserted his nation’s authority over the whole of the Western Hemisphere. Hence his alarming bluster about taking over Greenland, the Panama Canal and even Canada. But then ever since the Monroe Doctrine it’s been “America First” for the last 200 years.
The corollary of Trump’s quasi-isolationist worldview is likely to be America’s gradual disengagement from NATO, as well as his threatened defunding of the United Nations, the International Monetary Fund and the World Bank. As for the rest of the world, the rapid withdrawal of American diplomats and aid programs from Africa and other “shithole countries” will proceed apace.
Of course, some of Trump’s interventions may well be slowed or even partially reversed, either by the president himself or his successors. But tectonic plates have been fundamentally dislodged. Not even Streeck could have imagined this degree of “creative destruction” being achieved in a matter of a hundred days, with lasting consequences for both the United States and the rest of the world.
The internal political, economic and cultural fallout from Trump 2.0 may well end up being his most enduring legacy. His stress-testing of the constitution, coupled with his efforts to dismember the federal government, subvert higher education, deport migrants (whether documented or not), dismantle DEI programs and very likely undermine both Medicare and social security will affect every facet of American life. As for the economy, only Wall Street and the Fed will be able to moderate the negative fall-out from his ill-conceived efforts to reindustrialise the US economy and raise revenue (while degutting the Internal Revenue Service).
Internationally, the seesawing sequence of the Trump–Biden–Trump presidencies has, in Streeck’s judgment, sent the clearest signal to date of the “enduring risk for anyone entrusting the United States with representing them in international politics.” This message has come through first and foremost to the European Union and Britain, which now have both the freedom and necessity to chart their own futures with less regard for the fickle demands of the American hegemon. As Streeck predicted in Taking Back Control, this has already accelerated the European Union’s remilitarisation. What Streeck most feared is that these developments will strengthen the centralising tendencies of Brussels, thereby further diminishing the sovereignty and democratic institutions of its members.
Yet another trend identified by Streeck that Trump 2.0 has highlighted is the complementary decline of the United States and rise of China, especially in international affairs. Trump’s threats of extortionate tariffs on China, India and other BRICS members — and on Australia’s ASEAN neighbours — has only served to strengthen Beijing’s leadership of and solidarity with the world’s most rapidly growing economies. President Xi now stands as the world’s most powerful and resolute champion of globalisation and multilateral trade.
Meanwhile, Trump is for the moment basking in his anticipation of a “gilded age” in which oligarchs like himself can exercise unfettered power while enriching themselves still further. Perhaps this is why Streeck was recently moved to characterise Trump as a latter-day Louis Bonaparte, the would-be Emperor of France’s shortlived “second empire.” Certainly Trump’s gaudy regilding of the Oval Office harks back to that era.
But what Trump’s nineteenth-century fantasies mainly underscore is his disdain for democracy and the welfare of those he was elected to serve. Streeck, by contrast, is seeking a radical democratisation of sovereign nation states that will enable them to determine how they want to embed capitalism in their economies.
What about Australia?
Taking Back Control offers a Eurocentric perspective on the demise of hyperglobalisation and how best to manage the transition to a more decentralised world order in which nations enjoy greater autonomy in how they manage their affairs. But just how relevant is Streeck’s worldview and policy prescriptions for Australia?
There is no denying the profound difference between Australia’s and Europe’s geographies, histories, economies and polities. Nevertheless, we too have been deeply affected by the creation and collapse — being accelerated by Trump 2.0 — of the neoliberal world order. Consequently, we are also having to respond to many of the same geostrategic and economic challenges being faced by the Europeans and our Anglo allies (Canada and Britain, not forgetting New Zealand).
The Hawke–Keating governments enthusiastically embraced the neoliberal moment during the 1980s by opening up the Australian economy to overseas competitors and investment, deregulating the labour market and privatising publicly owned utilities and essential government services. Notwithstanding Kevin Rudd’s critique of neoliberalism in the wake of the global financial crisis, Labor and the Coalition have continued to operate within its ideological parameters.
As a result of China’s extraordinary economic transformation, Australia became one of the greatest economic beneficiaries of hyperglobalisation. At the same time, like Europe, we have yoked our defence strategy and military capabilities more closely than ever to the United States, most obviously in the disastrous wars in Afghanistan and Iraq. Our commitment to the alliance was then sealed in the dying days of the Morrison government — and reaffirmed by Albanese — with the signing of the AUKUS agreement.
Whatever the benefits of three pillars of the “New World Order” — neoliberalism, hyperglobalisation, and American hegemony —they have been accompanied by costs all too familiar to our European and Anglo allies. These include rising social inequality coupled with stagnant real wages and social benefits, inadequate funding of essential services, and an economic dependence on China’s ever-rising GDP.
While it’s undoubtedly true that “housing stress” and the “cost of living” — what a poignant phrase — are the issues top of mind for most Australians in this election, they echo what Streeck has described in Europe as a “revolution of sinking expectations,” in which “living and working are getting ever more burdensome, and life ever more restless and insecure.” But no one wants to address the underlying causes of this malaise.
No wonder Labor and the Coalition have lost the support of so many members and voters in the last decade to the Greens, other minor parties, and a growing wave of community independents. As the two “major parties” attempt to shore up their duopoly, they leave us clueless about how Australia might seize this moment to forge a new path for our country.
What would Streeck do?
What advice might Streeck offer in this moment, as Australians decide who will govern us next?
First, trust the people. This is not an incitement to “populism.” It’s a call to reaffirm democracy, based on the premise that “the same competence to decide fundamental questions of political life, including questions of social justice, is ascribed to every citizen, whether rich or poor, a member of an academy or a high school dropout.”
Judged by national polling in which clear majorities of Australians have expressed their support for strengthening action on climate change, abandoning AUKUS, reappraising the American alliance, and offering more help to renters and those on JobSeeker, the nation’s real political “centre” is decidedly to the left of Albanese’s Labor. Some hope this election will result in the formation of a minority Labor government supported by “progressive” backbenchers — more closely aligned with majority Australian opinion, that is. But unless the electoral system is changed, one of the two major parties will always be in control of future governments.
Second, Streeck would encourage us to ask fundamental questions about how and to what extent we want capitalism to be embedded in Australian society and our international trading relations. The current neoliberal compact supported by both Labor and the Coalition is not delivering the economic benefits and way of life Australians want and deserve. Just as happened four decades ago, it can and must be changed in response both to the collapse of neoliberal globalisation and to the demands of ordinary Australians for something better. But this will not happen without fierce resistance from those who have been and still are disproportionately benefitting from the old regime.
Third, he would urge us to recalibrate Australia’s alliance with the United States, along with our defence strategy and the weaponry required to support it. (Streeck’s only mention of Australia is the government’s decision to torpedo its earlier submarine deal with the French.) Apart from seeking a face-saving retreat from AUKUS, this will require distancing ourselves from America’s bellicose stance towards a China, which poses no realistic threat to our nation’s sovereignty and security.
Fourth, as Streeck recommended to European nations and the European Union, redirect and expand our diplomatic and economic engagement with the non-aligned nations of the Global South, especially in our own region. This effort will gain greater traction if Australia not only begins to decouple itself from the United States but also steps up its support for joint action with the overwhelming majority of other UN members to combat climate change, resolve regional conflicts, and strengthen the international justice system.
Straws in the wind
Encouragingly enough, echoes of Streeck’s perspective are growing louder here in Australia, undoubtedly provoked by the chaos of Trump 2.0. Nor are we just talking about the pronouncements of the usual suspects, including the Greens, the Australia Institute, and what I like to think of as John Menadue’s “wailing wall.” Doubts are even beginning to be raised about AUKUS in the Fin Review and the Sydney Morning Herald. Equally heartening have been hints of agreement with some of Streeck’s recommendations from several Albanese ministers, notably Penny Wong’s diplomatic efforts in the South Pacific and ASEAN.
Taking Back Control has helped me to make sense of the historical moment we’re in and how best to respond to it. It does so by offering a global perspective solidly grounded in political economy and leavened by what I would call Streeck’s “sociological imagination.” More importantly, it’s a clear and persuasive call to all of us, including “vintage reds” like me, to re-engage with Australian politics and reinvigorate our democracy. Perhaps we might begin by readmitting “capitalism” as an acceptable subject for political debate. •
Taking Back Control? States and State Systems after Globalism
By Wolfgang Streeck | Verso | $49.99 | 368 pages
