By Jayati Ghosh
There is a method behind the apparent madness of US President Donald Trump’s transactional, spheres-of-influence approach to geopolitics and the global economy. Nowhere has this logic been clearer than in his administration’s illegal abduction of Venezuelan President Nicolás Maduro and its ongoing efforts to secure control of the country’s oil reserves by installing a client regime. At the core of Trump’s revival of the Monroe Doctrine – or the “Donroe Doctrine,” as he has rebranded it – lies the belief that the United States can act with impunity within its self-defined “backyard,” and that other major powers, particularly China, can do the same in theirs. At the same time, the US reserves the right to advance its strategic interests wherever it sees fit, including Greenland.
This approach – aptly described by Indian economist Prabhat Patnaik as “gangster imperialism” – harks back to capitalism’s colonial roots, when overt hierarchies among peoples and polities were based on relative power. Setting aside the profound moral and legal issues raised by Trump’s strategy, can it actually work? Can carving up the world among major powers deliver a more stable and dynamic capitalism at a time when the global economy appears increasingly volatile and rudderless? If history is any guide, the answer is no.
Over the past two centuries, capitalism has oscillated between periods of intense conflict among competing states and phases in which a single dominant superpower acted as both rule maker and enforcer. In the 19th century, that role was played by the United Kingdom, which built a colonial empire larger than those of its European rivals. Since the mid-20th century, the US has largely occupied this position. While hegemony never meant an absence of war, it did limit large-scale inter-imperialist conflicts of the kind that preceded World War I, famously described by Vladimir Lenin as wars in which state-backed private capital fought for control over economic territory. Relative stability, such as it was, rested on a combination of overwhelming military power and a framework of global rules and institutions designed to keep geopolitical rivalries in check.
Today, however, America’s imperial reach is both overextended and waning. Trump’s foreign-policy agenda is premised on the view that while US-led globalisation once served the interests of American capital – especially finance – its returns have diminished with the rise of emerging powers like China. His proposed remedy is to rely on military dominance and residual economic power to secure direct control over resources and markets in regions he views as being within America’s exclusive sphere of influence. This means abandoning even the pretence of a rules-based international order, removing the fig leaf of promoting democracy and human rights, and shamelessly exhibiting a hoary doctrine of might-makes-right resource grabs. Even on its own terms, this strategy is unlikely to succeed. While it is clearly disastrous for US workers and smaller firms, it also fuels instability and undermines the long-term interests of large American corporations.
Economic resources are not neatly contained within distinct spheres of control, and markets, by their very nature, overlap. Disputes over access, borders, and control are therefore inevitable when one power attempts to assert dominance on every front, raising the likelihood of major wars. To be sure, some segments of corporate America stand to benefit. The military-industrial complex, for example, has reaped enormous profits from the wars in Ukraine and the Middle East. But other powerful interests will lose out.
Multinational corporations that depend on vertically disintegrated and geographically dispersed supply chains will be disrupted; financial institutions accustomed to relatively unrestricted cross-border capital flows will see their opportunities narrow; and Big Tech firms, which rely on access to data from around the world, will find themselves shut out of key foreign markets. The Trump administration has sought to manage these contradictions through a patchwork of coercive demands imposed on various trading partners. But while Trump’s bullying may produce some short-term concessions, it is deeply counterproductive. Many countries, including longstanding allies, are already seeking to reduce their dependence on the US by forming new coalitions around specific concerns. These problems are compounded by Trump’s broader economic agenda, which continues to prioritise fossil fuels over emerging technologies like renewables, electric vehicles, and battery storage.
As a result, US firms lack the dynamic economies of scale needed for long-term competitiveness. Speculative bubbles fuelled by overhyped AI models and cryptocurrencies are poor substitutes for sustained investment and technological leadership. Beyond its economic flaws, treating Latin America as America’s “backyard” is likely to provoke popular resistance. The US has a long history of trying to dominate the region through military intervention, support for military dictatorships, and sanctions.
Those efforts didn’t age well, and with inequality and economic insecurity rising across much of Latin America, conditions are already ripe for social and political upheaval. The consequences will be felt in the US as well, but the rest of the world cannot afford to wait for Trump – or a future administration – to change course. The caution shown by some European leaders is not the answer; nor is reactive aggression or a retreat into inward-looking isolationism. Given the scale and urgency of today’s global challenges, it is clear that confronting Trump’s brand of gangster imperialism requires international cooperation that does not hinge on US consent. Collective action is no longer optional. To counter the threat posed by a rogue America, it is the only viable path.
The writer, Professor of Economics at the University of Massachusetts Amherst, is a member of the Club of Rome’s Transformational Economics Commission.