Project Syndicate - The Future of American Hegemony - Feb 13, 2026 - Jonathan Levy

Project Syndicate

The Future of American Hegemony

Feb 13, 2026

Jonathan Levy

Political elites across the ideological spectrum agree that US President Donald Trump’s attacks on democratic institutions mark a historical turning point. Yet despite the chaos that has defined his second presidency, the foundations of America’s economic hegemony remain largely intact.

PARIS – In 1878, the Chinese writer Zhang Changjia published Opium Talk, a memoir of addiction that captured the social fallout of China’s forced entry into the global opium trade. Until the 19th century, China had little direct experience with the drug, but that changed when British traders smuggled it into the country and even more so after the mid-century Opium Wars compelled the Qing Empire to legalize the trade. By the time Zhang’s book appeared, around 40 million Chinese – roughly 10% of the population – were opium smokers.

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Historically, epidemics of opium addiction often break out at moments of imperial decline. As the Indian author Amitav Ghosh writes in his 2024 book Smoke and Ashes, opium showed Zhang what “non-smokers were unable to adequately appreciate: that an era had passed and history had entered a new stage in which the teachings of the old Chinese seers and sages were irrelevant.”

The parallels between China’s 19th-century opium crisis and the opioid epidemic in the United States are striking. Between 1999 and 2023, about 800,000 Americans died from opioid overdoses, 160,000 of them in 2022-23 alone. Today, roughly 11% of the US population reports non-prescription opioid use. In both cases, addiction – abetted by government corruption and corporate greed – accelerated social decay. Zhang attributed the rise of opium to Chinese over-worship of “The God of Money.” In the United States, the opioid crisis took root in the 1990s, after the Cold War’s end and the triumphalist embrace of free-market capitalism.

While the vast social-science literature on why Americans elected Donald Trump in 2016 and again in 2024 tends to focus on racism, economic anxiety, or some combination of the two, opioids receive surprisingly little attention. What research does exist shows statistical correlations between opioid addiction rates and stronger support for Trump in specific localities.

As Zhang foresaw, addiction could be a harbinger of historical change. Like Hegel’s Owl of Minerva, it takes flight at imperial dusk, signaling the dawn of a new age. That was certainly true of late Qing China, and it could be true of the US today.

To be sure, it is too soon to declare the end of American hegemony; the rise and fall of great powers tends to unfold over long stretches of time. As recent scholarship has shown, the 19th-century Qing Empire was far more resilient than once assumed, allowing it to endure until the early 20th century.

Still, the US opioid crisis points to both profound social pathology and political dysfunction. At the very least, the US is experiencing a dramatic transition whose consequences will extend far beyond its own borders.

This may not yet be apparent to many. After all, the pillars of America’s hegemony remain largely intact. The US retains overwhelming military might; the dollar remains the world’s main reserve currency; many of the most powerful and technologically advanced corporations are American; and US bond and equity markets continue to attract international capital, with the Dow Jones Industrial Average recently exceeding 50,000 for the first time. American culture, meanwhile, still shapes global tastes.

We thus find ourselves in a transitional moment in which it is difficult to know whether continuity or change will prevail. World-systems theorists have long argued that hegemonic transitions are marked by “chaotic uncertainty,” a thesis seemingly confirmed by Trump’s erratic governing style.

As of this writing, it is impossible to say with confidence what American politics will look like even in the near term. While diagnoses vary, there is a broad consensus among political elites across the ideological spectrum that America is undergoing a profound crisis that demands government intervention. So far, however, important continuities have prevailed, despite daily Trumpian assaults on the country’s democratic institutions. This resilience reveals something deeply troubling about American capitalism and the global system built around it. The opioid crisis suggests a 21st-century malaise – a recent history that must be reckoned with, should the ongoing transition lead to a better world, and not something worse.

From Trauma to Trump

To make sense of the present conjuncture, two broad historical developments must be appreciated. First, over the past two decades, democratic backsliding has reversed the democratization wave of the late 20th century, ushering in what the American political scientist Larry Diamond has described as a “democratic recession.” The second is the global financial crisis of 2007-09 and its aftermath.

In the lead-up to the 2024 presidential election, liberal commentators feared a scenario in which the Democratic candidate – first President Joe Biden, then Vice President Kamala Harris – would win the popular vote yet lose the presidency through the Electoral College. Because presidents are chosen by state-level electoral majorities, such an outcome would hinge on a disputed tally in a Republican-controlled swing state, triggering legal challenges and ultimately sending the election to the Supreme Court. There, a conservative majority would, in a poorly reasoned opinion, proclaim Trump the winner, effectively ending American democracy.

The irony lost on many is that all of this had already happened. America’s democratic backsliding began in late 2000, five years ahead of the global trend. In the 2000 election that year, Vice President Al Gore won the popular vote, but Florida’s disputed count and infamous “hanging chads” culminated in Bush v. Gore, the Supreme Court decision that handed the presidency to George W. Bush.

Unprocessed traumas tend to be reenacted, which helps explain Trumpism’s strange familiarity. Rather than an aberration, it represents a form of historical continuity, evoking fears rooted in past events that were never fully reckoned with.

One common response to trauma is displacement through positive association. The 2000 election exposed the fragility of US democracy, yet rather than fixing a broken electoral system, political elites quickly accepted the Court’s ruling in Bush v. Gore. After the more viscerally traumatic terrorist attacks of September 11, 2001, the US invaded Afghanistan and then Iraq – a country wholly unrelated to the attacks – under the pretense of “spreading democracy.” In reality, American democracy needed to be fixed, not exported at gunpoint.

Trump’s eventual rise to power was a direct result of the disastrous wars in Afghanistan and Iraq. And studies show a strong correlation between opioid use and US counties that disproportionately sent soldiers to fight in Afghanistan and Iraq.

In 2003, a little-known Illinois state senator named Barack Obama was among the few who opposed the Iraq War. A year later, he delivered a brilliant speech at the Democratic National Convention that catapulted him to national prominence.

While Obama and Trump differ in almost every respect, they have one thing in common: both were elected thanks to unexpected protest votes. It is difficult, in hindsight, to appreciate how stunning Obama’s triumph in 2008 really was. His victory in the primary over Hillary Clinton, who had voted for the Iraq War, followed by his general-election victory over Republican Senator John McCain (who had also voted for the war), amounted to a clear repudiation of the political establishment.

Obama had campaigned on a promise of healing, reconciliation, and a “new politics” that would bridge the country’s racial divide. The economy was not central to his campaign until it nearly collapsed. Then, less than two months before the election, Lehman Brothers’ bankruptcy left American capitalism prostrate, requiring extraordinary government intervention.

With Democrats controlling both chambers of Congress, the Obama administration had a narrow window to transform the US economy. Instead, it patched up the financial system, restored its links to the global economy, and returned American capitalism to working order.

A Reckoning Deferred

In his 2020 memoir A Promised Land, Obama describes how he discovered, once in office, that he was a “reformer.” Despite being “conservative in temperament,” he quickly found himself facing intractable opposition, driven in part by racial animus and exaggerated fears of his radicalism. The banks were bailed out, the Federal Reserve flooded the financial system with liquidity, and a fiscal stimulus package in 2009 supported a weak economic recovery, which was in turn bolstered by far more ambitious Chinese stimulus.

As president, Obama positioned himself between the bankers and what he privately described as the populist “pitchforks.” At the same time, on The Apprentice, his popular reality television show, Trump did the one thing Obama would not do as president. As boss, he came to Wall Street and told a bunch of Ivy League-educated elites, “You’re fired!”

The global financial crisis, in the end, did not bring about a rupture. American capitalism simply reverted to the form it had taken since 1980. Throughout what I have called the “Age of Chaos,” economic expansions have been driven by debt-leveraged asset booms: corporate stocks and bonds in the 1980s; internet stocks in the 1990s; housing in the 2000s; and equities again in the 2010s.

By definition, asset-price appreciation disproportionately benefits asset owners, exacerbating inequality as labor income stagnates. At the same time, prosperity becomes geographically concentrated. Since the 1980s, large parts of the US – especially outside major metropolitan areas – have missed out on the benefits of economic growth. Addiction followed economic upheaval. The opioid epidemic hit hardest in economically distressed areas, especially those most exposed to competition from low-wage Chinese manufacturing. In these parts of the country, resentment festered until Trump harnessed that anger and rode it to the White House in 2016.

The Iraq War and the post-2008 Great Recession had steadily eroded the legitimacy of the political establishment, a reality political elites have largely failed to recognize to this day. The Democratic celebration of the Obama-era economy resembled earlier elite deceptions, such as the Bush administration’s claims about Iraqi weapons of mass destruction. These forms of post-truth politics paved the way for the more extravagant fabrications of Trump’s and his MAGA movement, including the conspiracy theory that Obama was not born in the US and the widespread belief among Republicans that he is secretly Muslim.

For all his anti-establishment posturing, Trump was never the kind of figure who would bring American capitalism’s Age of Chaos to an end. In policy terms, his first administration achieved little. His 2017 tax cuts recycled the Reagan-era Republican playbook, while his anti-globalist rhetoric on trade and immigration was mostly bluster.

Trump’s anti-China policies did prove consequential, as center-left Democrats, rattled by his election, began moving toward a more confrontational trade and security stance. Many of the party’s China hawks ultimately rallied behind Biden, Obama’s former vice president.

Why Bidenomics Failed

The 2008 crisis created an unrealized opportunity to transform American capitalism. So did the economic crisis triggered by the outbreak of the COVID-19 pandemic. The question was whether policymakers would seize the moment this time.

When the pandemic hit in March 2020, Trump abdicated leadership, allowing the federal bureaucracy and state governments to determine lockdown policies. That year, he also signed into law roughly $2.2 trillion in economic relief, nearly 30% of it in the form of direct cash transfers. Uncharacteristically, Trump sought little credit for Operation Warp Speed, a truly remarkable government achievement that produced a working vaccine in record time and is estimated to have saved between 750,000 and 2.5 million American lives, along with millions more worldwide.

During the early stages of the pandemic, Biden’s presidential campaign was faltering, while that of Senator Bernie Sanders – a self-described democratic socialist – was gaining momentum. Party leaders intervened, with the Clinton-Obama wing of the Democratic Party consolidating around Biden. After Biden won the general election by some seven million votes, Trump responded by seeking to overturn the result, including by encouraging his supporters to storm the US Capitol on January 6, 2021. Despite this attack on American democracy, his grip on the Republican Party remained firm.

Once in office, the Biden administration declared that Democrats had learned the lessons of 2008, and there would be no return to austerity. In 2020, the Fed had poured so much money into the economy that its post-2008 response came to look like a dress rehearsal. Biden, for his part, pledged to open the fiscal spigot as well.

The administration pursued three major legislative initiatives: a $1.9 trillion short-term extension of pandemic relief; a $2.3 trillion package focused on modernizing infrastructure, promoting green energy, and boosting semiconductor manufacturing; and a $1.8 trillion social spending bill. The administration planned to finance its increased social spending with $3.8 trillion in additional revenue, largely through tax increases on corporations and high-income earners.

Behind this agenda was a group of senior advisers, including National Economic Council Director Brian Deese and National Security Adviser Jake Sullivan (a former Hillary Clinton aide), who openly criticized the Democratic Party’s past embrace of neoliberalism. In their view, neoliberal trade policies had allowed China to engage in intellectual property theft while flooding the American consumer market with low-cost goods.

This had hollowed out domestic manufacturing, deepened inequality, undermined national security, and fueled the resentment that Trump exploited so effectively. At the same time, deregulation had concentrated economic power, especially in the tech industry, calling for a revival of antitrust enforcement.

What followed was a familiar script. Corporate lobbies systematically undermined Biden’s legislative agenda. Democrats managed to pass temporary pandemic relief, but the social spending bill collapsed, and the proposed tax overhaul was pared back to a 15% minimum corporate rate. Meanwhile, roughly $500 billion in subsidies and tax incentives were directed toward semiconductor manufacturing and green energy, along with another $500 billion for infrastructure upgrades. These measures were justified almost entirely on national-security grounds, with China cast as America’s primary adversary. On this, at least, Biden and Trump agreed.

Then, in February 2022, Russian President Vladimir Putin launched his full-scale invasion of Ukraine. Within months, Congress pledged $40 billion in military aid. More aid soon followed, including support for Israel’s war in Gaza, and, as always, the US military-industrial complex benefited.

Russia’s invasion of Ukraine coincided with a surge in inflation, which peaked at 9.1% in mid-2022. The consumer-price spike further undermined Biden’s agenda, even though inflation was a global phenomenon at the time, and US economic policies were not its primary cause. Left with few options, the administration reaffirmed its commitment to central-bank independence, and the Fed responded with aggressive interest-rate hikes. After a brief interlude, austerity had made a comeback.

Ultimately, Bidenomics failed because it lacked a mass social movement to sustain it, and its most politically viable elements were tethered to national security rather than socioeconomic transformation. Consequently, Biden failed to win back Trump voters and even created new ones.

The CHIPS and Science and Inflation Reduction acts were not peanuts. But the historical track record of reliance on tax incentives to drive private investment into industries or geographies has been poor. Now, they promised a green energy transition. Meanwhile, even Biden’s modest gestures toward antitrust enforcement or financial regulation were enough to send segments of the business community running to Trump – liberal democracy’s fate be damned.

Much like in 2008, the combined monetary and fiscal response to the pandemic-induced crisis ended up reinforcing existing economic trends. Asset prices surged as new speculative vehicles proliferated, from cryptocurrencies to non-fungible tokens (NFTs). Stock markets soared, buoyed by an influx of retail investors, with estimates suggesting that 10-15% of pandemic relief payments flowed into US equities, driving up valuations by as much as 7%.

The arrival of ChatGPT in 2022 marked another technological inflection point. Like the internet boom of the late 1990s, AI generated enormous hype, massive capital outlays, and runaway valuations well ahead of demonstrated demand or clear evidence of productivity gains. Yet even heavy investment in AI infrastructure has failed to reverse the decline in productive investment that has persisted since the 1980s.

Bidenomics’ failure is underscored by how easily Trump has rolled back its core policies. Green subsidies have been scrapped in favor of renewed fossil-fuel expansion, while crypto markets have been freed from the Biden administration’s cautious regulatory efforts. Pandemic-era programs that significantly reduced childhood poverty have been dismantled, and social spending has been brutally slashed under Trump’s One Big Beautiful Bill Act. Once again, the US policy agenda is dominated by tax cuts for the wealthy, asset-price appreciation, and contempt for democratic institutions – in other words, more of the same.

American Power Persists – for Now

During the first year of Trump’s second presidency, his undermining of the international economic order and mass-deportation campaign dominated headlines. Early domestic initiatives, such as Elon Musk’s four-month-long campaign to decimate the federal bureaucracy through the Department of Government Efficiency (DOGE), quickly sputtered. By contrast, the administration’s violent immigration crackdown shows no sign of abating, extending beyond undocumented migrants to include legal residents and even naturalized US citizens.

Much of this has been carried out through executive orders with bombastic titles like “Protecting the American People Against Invasion,” reflecting Trump’s preference for spectacle over substance. Along with his relentless barrage of tariff announcements and assertions of extraordinary presidential powers to push through legally dubious – and often blatantly illegal – policies, it is clear that Trump’s second presidency has very different objectives from the first.

But what does this mean when viewed against the long arc of American economic hegemony? The best reference point is the 1980s, which marked a fundamental shift in America’s relationship to the world economy.

In the decades after World War II, the US – like most hegemonic powers before it – was a net exporter of capital and goods, spreading American culture and values along with them. Following the interest-rate shock engineered by Fed Chair Paul Volcker between 1979 and 1982, however, the US economy entered a new phase – call it a Hegemony 2.0 – becoming the first hegemonic power to turn into a net importer. Domestic manufacturing suffered, but personal consumption skyrocketed, fueled by ever-growing public and private debt.

Historical precedents for this kind of debt-fueled dominance are hard to find. Wall Street reached new heights of global dominance. The dollar reigned supreme, with US Treasuries solidifying their status as the world’s leading reserve asset and the American consumer market becoming the primary destination for global exporters, especially China.

It is an arrangement that has proven surprisingly durable. Bush’s disastrous war in Iraq failed to undo it; neither did the 2008 financial crisis nor Trump’s election in 2016. Even his second presidency, disruptive as it has been, has yet to do so.

Outsourcing Hegemony

The Trumpist critique of the post-1980 order focuses overwhelmingly on trade. While Trump’s obsession with “winning” or “losing” bilateral trade balances reflects his weak grasp of macroeconomics, he is not wrong to insist that global trade creates winners and losers. Many of the relative losers of recent decades live in the US and now form a core part of his electoral base.

But can Trump’s chaotic tariff regime remake the international economic order, and to what end? While many commentators argue that he is dismantling the postwar economic order, Trump’s tariff regime is better understood as an attempt to weaponize the post-1980 US consumer market to extract concessions and symbolic “wins.” As Nic Johnson of the University of Chicago has aptly put it, “Trump’s trade war is better explained not as an economic endeavor but as a culture war” aimed at restoring a sense of lost national pride.

Though Trump’s tariffs have real economic consequences, the fears that they would lead to economic collapse were always overblown. The more important question is whether the US consumer market will retain its global primacy after Trump’s trade wars, or whether other economies – particularly China – will shift toward greater domestic consumption.

In reality, Trump is far more inclined to manipulate, even destroy, the existing order, at home and abroad, than to replace it. That task falls to non-US powers and to future US administrations. It requires grappling with America’s role in global finance as much as trade. So far, the second Trump administration, like Biden’s before it, has left the global financial architecture untouched.

Disturbingly, Trump’s ongoing attack on America’s political institutions – including his efforts to subordinate the military to his personal authority – has done little to deter wealthy American and foreign investors from channeling capital into US markets rather than into productive investments elsewhere. It is difficult to imagine a more perverse outcome: global needs are vast, yet private wealth managers complain that “too much capital” is chasing “too few deals.” So they buoy the American economy, while Trump assaults the rule of law.

This raises the prospect of a new phase of US hegemony – call it Hegemony 3.0 – sustained by the ongoing participation of non-American investors and foreign governments. Hegemonic powers, of course, have always depended on co-optation. What is unclear is what, exactly, is being co-opted, by whom, and on what terms, as global wealth continues to underwrite American dominance despite Trump’s dangerous antics.

What, then, would it take to trigger a genuine historical transformation? Another market collapse or a global recession could weaken Trump and his illiberal allies, thereby creating a political opening for a more credible and ambitious Democratic Party. A climate-induced planetary emergency could also force a decisive break with the existing order.

Throughout the long history of American capitalism, major transitions have occurred when the federal government has managed to get ahead of capital rather than trail behind it. This time, however, the fate of US hegemony may depend as much on decisions made abroad as on choices made at home. In the meantime, the opioid crisis – like Qing China’s opium epidemic – appears less a harbinger of transformation than a symptom of a deeper crisis that remains unresolved.

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Jonathan Levy

Jonathan Levy

Writing for PS since 2022

7 Commentaries

Jonathan Levy, Professor of History at Sciences Po, is the author of Ages of American Capitalism: A History of the United States (Random House, 2021) and The Real Economy: History and Theory (Princeton University Press, 2025). His future work will include a global history of money and a history of climate change focused on Houston, Texas.