Donald Trump was elected as the mouthpiece for a populist insurgency that humbled the biggest political machine in the United States. But he is also a plutocrat, a scion of the very system against which he mobilized so much anger. And his cabinet is oligarchy incorporated. What most distinguished Trump from Hillary Clinton in his public performance was his candor in admitting that the system is rotten and so is he. Trump was elected because he is deplorable, and proud of it.

However fascinating and repugnant Trump is as a political performance, his campaign is but a buoy bobbing up and down, revealing the existence of powerful national and global currents, not directing them. Those currents were caused by something else. This essay tries to identify and examine those underlying currents, which derive from the deregulation of the financial sector and liberal capitalism, from the rapaciousness of the national security establishment, and from the political logic that derives from their fusion.

The early twentieth century’s era of liberal globalization led to totalitarianism, the bloodletting of World War II, and the Holocaust.

My guide to understanding our current global and political crisis is Karl Polanyi’s The Great Transformation. Published in 1944 amid the ruins of nineteenth-century liberal civilization, Polanyi’s account is prescient of the dangers of the second global liberal order and its eventual unraveling. He describes how the unprecedented century of peace among the Great Powers (1815–1914) culminated in a world dominated by institutions dedicated to managing the global market. To Polanyi, the central intellectual error of nineteenth-century political economists was to treat land, labor, and money as actual commodities, rather than “fictitious commodities” governed by human values. Against the logic of the market, he said, they cannot be priced according to supply and demand, and any attempt to do so would ultimately render human society incoherent—“a wilderness.” This, he argued, duly transpired in the early twentieth century’s era of liberal globalization, followed by ostensibly protective measures against the societal devastation—war among empires, revolution and fascism—which of course caused even greater annihilation. In increasingly desperate attempts to preserve the market-based global order—especially the gold standard—entire societies were sacrificed. It was a fruitless sacrifice, because the price ultimately paid was totalitarianism, the bloodletting of World War II, and the Holocaust.

Nonetheless the global order of the last seventy years has been increasingly organized around the market principle, which started as a chastened junior partner to the multilateral system designed in Bretton Woods but ended up running the show with hubris reminiscent of Victorian laissez-faire imperialism. Only in the last few years have economists woken up to the extremes of inequality engendered by unfettered global markets. Meanwhile Brexit and the Trump vote have shown us the political significance of the societal wastelands that follow in their wake.

There is no serious debate about the fact that the global financial sector—dominated by Wall Street and its tame multilateral institutions such as the IMF—was at best clumsy and at worst greedily culpable in the 2008 financial crisis, and that the financial barons got away with it. Whatever Keynesian instincts President Obama may have had on taking office, he was very quickly swayed into bailing out the banks and not the homeowners. Soon the bankers were back, unreformed. Those still holding mortgages have been appeased by exceptionally low interest rates, but that should not disguise the reality that a huge swathe of society was sacrificed to save the financial system. The 2016 vote is in part their revenge.

Trump has shown not the slightest inclination to address the systemic problems driving the ongoing global financial crisis. Of course it is unlikely that the now-counterfactual Clinton administration would have differed much on those policies most culpable: the regulation of financial capital, the monetization of politics, and the permanent government of the national security establishment, a theme to which I will return. As befits a capitalist whose wealth was extracted from working the tax code and legal system for the maximum corporate welfare handouts, Trump’s economic proposals are voodoo economics on steroids, doubling the dosage of precisely those poisonous prescriptions that caused the sickness in the first place. Nonetheless Trump’s critique of Clinton possessed an odd candor: when challenged about his business ethics in the presidential debates, he replied simply that he would get away with what he could. His riposte contains an uncomfortable truth that resonated with many Americans: economics is politics; the market is a matter of what the government decides it should be.

In America economics is politics; the market is a matter of what the government decides it should be.

While his election briefly roiled global markets, they soon returned to normal. Investors likely realized that, save for his supposed (and likely symbolic) protectionism, Trump’s instincts do not deviate from capitalist orthodoxy. He surely has not the slightest intention of tackling the excess power of the financial sector. Nor will he challenge the idea that an unfettered market run by and for corporations is the route to making America great again. He just acknowledges that it is a matter of political choice—and that is the admission that many Americans found so liberating.

Indeed, just as the largest investment banks have been labeled too big to fail, so too a market economy overflowing with derivative financial instruments has become too big to challenge—and at any rate, Trump would not be the one to challenge it. In the midst of debates about regulation, though, it is easy to forget that a very powerful and influential portion of Wall Street has no tie to the tangible production of anything; rather it deals in abstract financial instruments with little meaningful relationship to the real economy in which people go to work and manufacture or grow things or provide services. These financial services do not trade in goods and services, but in expectations: most derivatives are bets on the future. They may be hedged in very sophisticated ways, but they are still bets. However complex the math, they are founded on particular, narrow worldviews of those placing the bets.

This is seen most clearly in smaller countries (like Greece) where national wellbeing was sacrificed in order for the country to maintain a required level of “confidence” among investors (in Greece’s case, chiefly foreign). Paul Krugman has poked what he calls the “confidence fairy” and found it is a chimera. He gives the example of Britain, where shortly after the Greek crisis, economists advocated with remarkable unanimity that austerity measures would not bring growth, and that a Keynesian counter-cyclical stimulus was needed, and at precisely the same time, a hundred business leaders advocated austerity. The economists had the better arguments but the CEOs got the policies they wanted. “Business confidence” and “investor confidence” were, in fact, a confidence trick: the material interests of businessmen and bankers were better served by peddling the fiction that their self-interest, not governmental engineering of the economy, were the engine of growth and employment. As the French economist Thomas Piketty explains at length in his masterful Capital in the Twenty-First Century (2013), this is a formula for concentrating more and more wealth in fewer and fewer hands, recreating self-perpetuating inequalities redolent of aristocratic nineteenth-century Europe—even in America, a land that once prided itself on being the land of egalitarian opportunity.

Wall Street deals in abstractions, trading in expectations and making bets on the future. It has little meaningful relationship to the real economy.

The bank bailouts and refusal to tax the ultra-rich are a stunning case of what the German sociologist Wolfgang Streeck has called the dominance of the Marktvolk (financiers) over the Staatsvolk (citizens). The era of national democracies—the first half of the last seventy years—was defined by governments answering to their electorates for the simple financial reason that their revenues relied on collecting taxes. But in the second half of this era (from approximately 1980), politicians realized that states could be funded by debt, with the result that those who determined the rules of debt management—and especially the price to be paid for borrowing—now call the political shots. The “democratic debt state,” according to Streeck, answers both to the Marktvolk and the Staatsvolk. But there is a daily financial (Marktvolk) plebiscite on the health of government, when its financial instruments are auctioned, and only an occasional resort to the verdict of the electorate (Staatsvolk). And by the time a candidate faces the electors, she has typically already been thoroughly vetted and indoctrinated by financiers. So the Marktvolk are the winners.

The American Marktvolk—the barons of Larry Bartels’s “New Gilded Age”—will not knowingly send their government to the wall the way that Indonesia and Greece were sacrificed at the altar of investor confidence. But so deep is their belief that their own material and political interests are exactly the same as the wellbeing of the nation that they could nonetheless blindly make this fatal error. Such is the revolving door between government and the financial sector that government does not just depend on the Marktvolk: it is the Marktvolk.

The Marktvolt do not just determine the overall viability of a state, but also the prospects for a political party and its candidates for office. Any politician who wants to run a campaign and secure the necessary allegiances needs to manage her career along certain business principles. She needs a political budget (discretionary spending money for buying political services and loyalties), political intelligence to know who will accept what price in the political marketplace, and she needs to be in cahoots with those who set the rules of this bazaar. Fundamentally it is not a matter of greed or corruption—though those do exist—but of the application of the laws of supply and demand to political projects and public office.

Hillary Clinton became the machine politician par excellence. She was unabashedly comfortable with Wall Street; her candidature was extremely well funded. She had learned the hard way how power works, and had the best political intelligence apparatus, tuned in to the wavelengths of the political market (though not, as it transpired, to those voters who had tuned out). As a result, Clinton occupied the exact center of a political gravitational field constituted by the forces of the financial sector, the national security establishment, and their symbiotic political machine. No conventional candidate could compete. The closest to a popular challenge from the left, Bernie Sanders, was defeated by Clinton’s control over the Democratic Party machine. The result was that only a candidate who was immune to the laws of political gravity—who refused to grind the gears of self-interest, who conspicuously spurned paying lip service to fact in claims and truth in argument—could survive. It was precisely because Trump was so outrageous that his campaign was immune to the logic of the political market.

Clinton occupied the exact center of a political gravitational field constituted by the financial sector, the national security establishment, and their symbiotic political machine.

Trump is not a revolutionary but a putschist, and his power grab is the culmination of a period that saw the simultaneous deregulation of the financial and political markets. Jonathan Rauch has identified how a series of reforms intended to clean up political bargaining in Washington, D.C., ended up paralyzing the machinery of government. Rauch offers unlikely praise for the much-denigrated class of political fixers and brokers: “The middlemen could be undemocratic, high-handed, devious, secretive. But they had one great virtue: They brought order from chaos. They encouraged coordination, interdependency, and mutual accountability. They discouraged solipsistic and antisocial political behavior.” The reformers, on the other hand, opened up the procedure for nominating party candidates to outside (extreme) interests; they regulated party money (and opened up separate private funding channels); they eliminated rewards for loyalty and seniority within Congress (eroding party discipline); and they reformed closed-door negotiations and earmarking (making it harder to made the necessary compromises).

This created the conditions for the political sphere to be inundated by private special interests and populist agitation. The Citizens United ruling inflated the market exponentially, opening the floodgates to unlimited private money in political campaigning. Obama’s decision in 2008 not to cap his campaign financing, for the shortsighted goal of outspending McCain, proved a fateful compromise. To double the insult, the Democratic Party learned the wrong lesson from Obama’s insurgency, concluding that it was money, not popular energy, that won the presidency.

As with the financial sector, deregulation of the political market does not just mean greater freedom of action for the entrepreneur. It means the development of a new set of products. In banking, this takes the form of derivatives: products whose value depends not on actually existing commodities, but on expectations. In the political sector, there are derivatives too. Washington politicians deal less and less in real goods such as legislation that delivers material change, and more in promises that the confidence fairy will deliver goods to those who behave.

But the subordination of power to the market sooner or later runs up against an unavoidable obstacle: in a democracy, votes cannot always be bought. A talented or lucky political entrepreneur can get people to vote without being bribed, or even to vote against their material self-interest. But a political startup of this ilk can only do it once he has succeeded in entering the market, and there are formidable barriers to doing this. He needs money, profile, and an organizational capacity. Only an insider can launch a campaign, but once an aspirant clears the hurdles he can then masquerade as an outsider. Both Obama and Trump managed this, each co-opting an established political party, and then ran their electoral insurgencies by selling political derivatives, also known as visions or dreams. Obama won the optimist vote, having convinced people that there was reason to hope. Trump did it on the cheap: fear is easier to brand. He also had the benefit of being an established television celebrity, peddling upward mobility to would-be startup businesspeople, as well as unlimited airtime from a mesmerized media and a Democratic advertising campaign that generated still more fearful pessimism, thereby drawing attention to precisely those qualities that made Trump the champion of that worldview.

The outsider political business model cannot work forever. An incumbent is no longer an insurgent. This is Trump’s trap: now he has to deliver.

The outsider political business model can work only occasionally. An incumbent can no longer pretend to be an insurgent. This is Trump’s trap: now he has to deliver. In the recent past, the cost of operating as a mainstream political aspirant or actor has been so high—and the prospects of getting any real governing done so low—that almost the only thing that elected officials have been able to do is campaign for reelection. Trump has more options. Because of Republican control of Congress, he has far greater freedom of action than any of his recent predecessors, and so can rapidly tear down many of Obama’s signature achievements. In theory he could also truly tear up the neoliberal rulebook and spend a few trillion dollars on public infrastructure and employment, delivering the Keynesian-style recovery that Obama failed to manifest eight years ago.

But it is going to be hard. Trump has sold himself as a dealmaker, but with the tools for legislative and executive compromise dismantled, it is likely that the machinery of government will again seize up.

There are only two exceptions to the great Washington paralysis. One is the Federal Reserve, which can act quickly and decisively when the Marktvolk’s interests are threatened, as it did in 2008. The other is the Department of Defense, which gets its budget passed no matter what, and whose relentless expansion is supported by even the most ardent advocates of lean government, notably congressional Republicans.

In part for this reason, the national security establishment and its affiliated military-industrial-congressional complex (MICC) is the true permanent government in Washington, D.C. Let me provocatively call it the Kriegsvolk. The MICC coalesced under the administrations of Presidents Harry S. Truman and Dwight D. Eisenhower (Eisenhower, on leaving office, ironically warned against its baleful influence). Since then the MICC has been a constant in American political life. Behind the veil of secrecy, blessed by the extraordinary popularity of the military, we see political business transacted on the old principles of quiet bargaining, immune to the reforms lamented by Rauch. It is the singular subject on which there is bipartisan consensus in Washington.

Arms manufacturers are commercial businesses, of course; they sell weapons. But their CEOs must be political traders too, and fortunately for them, the Kriegsvolk move seamlessly between government, the private defense sector, and the consultants who do everything from long-range threat assessments to contributing to the president’s daily briefing on national security. Arms companies’ sales depend upon demand, which is almost exclusively from government and depends upon government identifying and acting upon security threats. The size of the market depends upon a national perception of insecurity and public support for the military—which of course have both swollen hugely in the last fifteen years and will surge again under Trump’s regime of fear.

Capitalism was reprieved by the political dispensation that followed World War II. Its dangerous dogma is now ascendant. The inevitable crisis is here.

By the standards of the economy as a whole, the arms business is not big. The money it dispenses directly to candidates is relatively modest, and the payouts are given to members of both parties. The outright corruption of arms companies bribing U.S. politicians is quite small compared to what happens in the Middle East or South Asia. That is because the arms sellers on the whole do not need to spend big money to get what they want in Washington: they only need to mount the occasional punitive campaign against a critic to advertise their muscle and keep dissent in order. The corruption has gone so deep that it is no longer recognized as corruption: it is just how it is. Dick Cheney’s tenure as vice-president represented the fusion of the MICC with political business. But this is not a partisan issue; the Democrats too realize that their political fortunes are tied to keeping the permanent government happy. Although Obama did not start any new wars, he doubled U.S. arms exports, approving sales worth $278 billion over eight years.

The national security establishment and MICC function as a well-regulated club at the heart of government, immune to the gyrations of elections, growing in strength because the rest of the government has become so dysfunctional. Government does not just answer to the Kriegsvolk—government is becoming the Kriegsvolk. We see this with the Department of Defense taking over foreign policy, for example. The militarization of the government would not have changed under Hillary Clinton and it will not change under Trump, who may eschew liberal interventionism and weaken foreign alliances, but promises a well-armed America in their place. The morning after Trump’s election, stocks in U.S. defense contractors rose sharply. Meanwhile, Obama is passing on to his successor the most powerful, intrusive, and secretive national security apparatus in American history.

• • •

So now—a winning minority of the electorate having lodged its protest and voted for its own gravedigger—the logic of today’s political economy is laid bare. What then can we take from The Great Transformation to deepen our understanding of our predicament? Polanyi’s central conclusion is that unregulated capitalism promised a “stark Utopia” of great wealth but destroyed the social and material basis of a humane society. Just over a hundred years ago, nineteenth-century Western liberal civilization reached its apogee, which was also the moment at which it could no longer contain the forces of disorder that it had unleashed. The massive destruction of the world wars, the communist revolution, fascist imperialism, and the Great Depression followed. Capitalism was reprieved by the political dispensation that followed World War II. John Maynard Keynes provided the intellectual capital for managing the market, and the victors of the war recognized that full employment, social welfare, and a good measure of equality were necessary to save civilization. But capitalism’s dangerous tendencies remained and, once freed from the challenge of socialism, its utopian dogma was again ascendant. The inevitable crisis is now here.

Financially, renewed crisis has crept up on us since the false hopes following the 2008 bailout. Interest rates in the world’s biggest economies are now effectively zero, and in some cases negative. Central banks will borrow money from creditors, promising that they will return almost all of it. Investors cannot bank on the future: there is an oversupply of financial derivatives relative to the actual goods and services that make up a real economy. The Wall Street Journal, the Economist, and the Financial Times worry that the world’s central bankers have run out of instruments to fix global financial crises.

The political crisis is here too, its self-anointed saviors donning the uniform of plutocratic populism. It is a revolt not only against the wastelands created by neoliberal economic orthodoxies, but also against the way in which monetized machine politics reduces political identities to commodities. The reactionary insurgency is driven by a collapse of confidence in governing elites: the promises made by mainstream politicians now trade at such a discount they are worthless. The populists’ immediate and opportunistic targets of scapegoating are immigrants, minorities, and free-trade agreements. The insurgents respect men in uniform, their weapons, and solutions imposed by force of arms. Let us call this Garrison America.

Global war is a conflict of destabilization, with big powers intervening in domestic politics, buying influence, and manipulating public opinion. It is a global political market of rival plutocracies, heralding a war on democracy.

Meanwhile, the global institutions that were designed to manage crisis are weak. The most important state-based banking institutions—central banks and their offshoots such as the IMF—simply do not have the resources and tools to deal with a crisis at this scale. They have also been discredited, in the European case for having sacrificed Greece to dogma. The United Nations, which should be invaluable at a time when rising powers around the world are challenging the wounded Leviathan and jostling with one another, has been irredeemably weakened by the hubristic decisions of the Bush administration to overrule the prohibition on aggression and invade Iraq, and the Franco-British decision, supported by Obama’s secretary of state, to use “protection of civilians” as a pretext for regime change in Libya.

What is on the record about the attitude of the incoming U.S. chief executive to the UN is confined to its occupation of prime Manhattan real estate in the shadow of the Trump World Tower, and specifically his claim, made in a 2005 Senate hearing, that he could do a better and cheaper job renovating those buildings, “a bigger version of the Wollman Skating Rink.”

At times like this, we need farsighted leaders with a sense of the dangers that await. Britain was ill provided. Brexit, until last month the biggest political tremor in the crumbling of the global-multilateral order, was the product of the reckless, small-minded ambitions of a coterie of old school chums who played with matches and burned the house down. If illustration were needed of the catastrophic smugness of an elite, look no further than Boris Johnson, for whom the fate of the country was of no greater import than a nice turn of phrase in a newspaper column. After Brexit, with the lies of its proponents exposed and Remainers’ predictions of calamity coming true one by one, the British government is wholly preoccupied with the stupendous mountain of legal paperwork necessary for the world’s most complicated divorce. It is uncertain what is more antithetical to farsighted leadership: the self-inflicted paralysis of London, or the freedom of action enjoyed by the incoming Republican president with a Republican legislature in Washington, D.C.

Trump’s promises have been so vague that it will be hard for him to disappoint. Nonetheless, many of his supporters will wake up to the fact that they have been duped, or realize the futility of voting for a wrecker out of a sense of alienated desperation. The progressives’ silver lining to the 2016 election is that, had Clinton won, the Trump constituency would have been back in four years’ time, probably with a more ruthless and ideological candidate. Better for plutocratic populism to fail early. But the damage inflicted in the interim could be terrible—even irredeemable if it were to include swinging a wrecking ball at the Paris Climate Agreement out of simple ignorant malice.

Polanyi recounts how economic and financial crisis led to global calamity. Something similar could happen today. In fact we are already in a steady unpicking of the liberal peace that glowed at the turn of the millennium. Since approximately 2008, the historic decline in the number and lethality of wars appears to have been reversed. Today’s wars are not like World War I, with formal declarations of war, clear war zones, rules of engagement, and definite endings. But they are wars nonetheless.

What does a world in global, generalized war look like? We have an unwinnable “war on terror” that is metastasizing with every escalation, and which has blurred the boundaries between war and everything else. We have deep states—built on a new oligarchy of generals, spies, and private-sector suppliers—that are strangling liberalism. We have emboldened middle powers (such as Saudi Arabia) and revanchist powers (such as Russia) rearming and taking unilateral military action across borders (Ukraine and Syria). We have massive profiteering from conflicts by the arms industry, as well as through the corruption and organized crime that follow in their wake (Afghanistan). We have impoverishment and starvation through economic warfare, the worst case being Yemen. We have “peacekeeping” forces fighting wars (Somalia). We have regional rivals threatening one another, some with nuclear weapons (India and Pakistan) and others with possibilities of acquiring them (Saudi Arabia and Iran).

Above all, today’s generalized war is a conflict of destabilization, with big powers intervening in the domestic politics of others, buying influence in their security establishments, bribing their way to big commercial contracts and thereby corroding respect for government, and manipulating public opinion through the media. Washington, D.C., and Moscow each does this in its own way. Put the pieces together and a global political market of rival plutocracies comes into view. Add virulent reactionary populism to the mix and it resembles a war on democracy.

What more might we see? Economic liberalism is a creed of optimism and abundance; reactionary protectionism feeds on pessimistic scarcity. If we see punitive trade wars and national leaders taking preemptive action to secure strategic resources within the walls of their garrison states, then old-fashioned territorial disputes along with accelerated state-commercial grabbing of land and minerals are in prospect. We could see mobilization against immigrants and minorities as a way of enflaming and rewarding a constituency that can police borders, enforce the new political rightness, and even become electoral vigilantes.

Liberal multilateralism is a system of seeking common wins through peaceful negotiation; case-by-case power dealing is a zero-sum calculus. We may see regional arms races, nuclear proliferation, and opportunistic power coalitions to exploit the weak. In such a global political marketplace, we would see middle-ranking and junior states rewarded for the toughness of their bargaining, and foreign policy and security strategy delegated to the CEOs of oil companies, defense contractors, bankers, and real estate magnates.

The United Nations system appeals to leaders to live up to the highest standards. The fact that they so often conceal their transgressions is the tribute that vice pays to virtue. A cabal of plutocratic populists would revel in the opposite: applauding one another’s readiness to tear up cosmopolitan liberalism and pursue a latter-day mercantilist naked self-interest. Garrison America could opportunistically collude with similarly constituted political-military business regimes in Russia, China, Turkey, and elsewhere for a new realpolitik global concert, redolent of the early nineteenth-century era of the Congress of Vienna, bringing a façade of stability for as long as they collude—and war when they fall out.

And there is a danger that, in response to a terrorist outrage or an international political crisis, President Trump will do something stupid, just as Europe’s leaders so unthinkingly strolled into World War I. The multilateral security system is in poor health and may not be able to cope.

Underpinning this is a simple truth: the plutocratic populist order is a future that does not work. If illustration were needed of the logic of hiding under the blanket rather than facing difficult realities, look no further than Trump’s readiness to deny climate change.

We have been here before, more or less, and from history we can gather important lessons about what we must do now. The importance of defending civility with democratic deliberation, respecting human rights and values, and maintaining a commitment to public goods and the global commons—including the future of the planet—remain evergreen. We need to find our way to a new 1945—and the global political settlement for a tamed and humane capitalism—without having to suffer the catastrophic traumas of trying everything else first.