Global Economic Indicator: The Engine of Modern Conflict — Part 4: The Reckoning

The Engine of Modern Conflict — Part 4: The Reckoning

From fictitious capital to fascism: how financial capital must turn to violent extraction abroad and digital repression within. The crisis of capitalism unmasked.

Feb 20, 2026

Introduction: The Mask Falls in Munich

 

On February 14th 2026, U.S. Secretary of State Marco Rubio stood before the Munich Security Conference and delivered a message that was, in his own words, “a little direct.” To the casual observer, it might have sounded like a routine call for transatlantic unity—a plea for Europe to spend more on defence, to control its borders, and to rediscover pride in “Western civilization.” Ursula von der Leyen, President of the European Commission, called it “reassuring.”

 

But for those paying attention, the speech was something else entirely. It was a candid articulation of the doctrine this article will dissect: the final, desperate logic of a financialized empire shedding its last pretences.

 

Rubio’s address was laced with nostalgia for explorers and empires, for a time when the West “expanded—its missionaries, its pilgrims, its soldiers, its explorers pouring out from its shores to cross oceans, settle new continents, build vast empires.” This was not merely historical reflection. It was a prescription for the present. The “rules-based international order,” he argued, was an “overused term” born of a “foolish idea” that the national interest could be subordinate to global norms. The United Nations, he declared, “has no answers,” pointing to Gaza, Ukraine, Iran, and Venezuela as proof.

 

And then came the confession that matters most for this analysis. When Rubio justified recent American actions, he did not speak of spreading democracy or defending international law. He spoke of raw power applied for specific, material ends. On Iran, he boasted that diplomacy and the UN were “powerless” to constrain Tehran’s nuclear program. Instead, he said that “required 14 bombs dropped with precision from American B-2 bombers.” On Venezuela, he was equally blunt: international institutions were “unable to address the threat,” so “it took American Special Forces to bring this fugitive to justice.”

 

This is the core of the matter. The “fugitive” in question was a head of state, and the “justice” was a unilateral extraction justified by the imperatives of national power. Rubio was not outlining a new policy; he was giving voice to the systemic logic that has been driving U.S. foreign policy for decades, now stripped of its diplomatic niceties. The “international order” Washington claims to defend is being explicitly discarded, replaced by a doctrine of direct action to secure what the empire requires.

 

This article is an analysis of why this is happening. It will trace the path from financialized crises to the imperial logic of geopolitical conflict, arguing that the wars and confrontations of our era are not separate disputes but a single, desperate war. A war waged by a system that has exhausted internal growth and now seeks to seize the last remaining reservoirs of real, tangible collateral—by any means necessary. Rubio’s speech in Munich was not a departure from this reality. It was its most honest articulation yet.

 

Financialized Crises and the Imperial Logic of Geopolitical Conflict

 

There is mainstream narrative of the current cycle of escalating global violence, and then there is the real one.

The mainstream media sees separate conflicts. Russia invaded Ukraine, compelled by some primordial imperial ambition. The United States confronts China over competing visions of the Indo-Pacific order. Iran is pursued for its nuclear program. Venezuela is sanctioned for its authoritarianism—or narco-terrorism, or support for Hamas. Through the lens of the conventional narrative these are distinct problems requiring distinct solutions.

 

The truth is that these are one conflict. In reality, Russia, China, Iran, and Venezuela are not separate targets but successive fronts in a single war. Not a war of nations against nations, though it takes that form. It is a single war orchestrated by a system against everything that obstructs its survival.

 

This is not metaphor. It is the logic of financialized capitalism in its terminal stage.

 

The Pyramid and Its Hunger

 

To understand where we are, we must first understand upon what we stand.

 

For decades now, the economies of the Western world have not really grown. Not in the sense that matters. Real productive capacity—factories, infrastructure, the tangible apparatus that actually makes things—has stagnated or been offshored. What has grown instead is the paper.

 

Stocks. Bonds. Derivatives. Sovereign debt. Securitized mortgages. Futures contracts on everything from oil to rainfall. This is not wealth in any real sense. It is fictitious capital: claims on value that has not yet been produced, bets on future revenue that may never materialize, titles to wealth that exists only because enough people agree to pretend it exists.

 

And yet this fictitious capital must be treated as wealth. Bonuses are paid from it. Pensions depend on it. Private jets are bought with it. Entire economies are organized around its continuous inflation. So, the system does what it must: it creates more paper to validate the existing paper. It layers debt upon debt, leverage upon leverage, derivative upon derivative. It builds a pyramid so vast that its peak is invisible, and so heavy that its base is cracking.

 

This was not anyone’s intentional design. It is the emergent logic of a system in which every individual actor is rationally compelled to behave in ways that collectively guarantee collapse. Refuse to accept the risks everyone else accepts, and you are excluded from the game. Accept them, and you help inflate the pyramid another inch closer to breaking point.

 

For a long time, the pyramid could be stabilized through internal extraction. Privatization cannibalized the public sector. Structural adjustment stripped the Global South. Financialization hollowed out the domestic working class. Each crisis—2000, 2008, 2020—was met with more liquidity, more debt, more paper. Each solution made the pyramid heavier and its foundation weaker.

 

But there comes a point when internal extraction is no longer enough. When the system has consumed everything digestible within its existing boundaries. When the only remaining source of real value lies outside the pyramid’s walls, controlled by powers that refuse to subordinate their resources to its valuation.

 

At that point, the hunt for collateral becomes geopolitical.

What Is Actually Being Fought For

 

Consider the wars and confrontations of the past two decades. Not their stated justifications—those are for public consumption—but their material function within the logic of the pyramid.

Iraq and Libya: Not about weapons of mass destruction or humanitarian intervention. About unlocking state-controlled hydrocarbon reserves and subordinating them to Western capital markets. Every seized asset, every enforced arbitration award, every new debt contract tied to future oil barrels becomes a brick of real collateral added to the base of the pyramid. The physical oil is secondary. The paper created from it is the immediate prize.

 

Venezuela: Not about democracy—or narco-terrorism, or Hamas. About the last major oil reserve in the Western hemisphere not fully integrated into the dollar-debt system. Its subordination would open trillions in assets for securitization. Its resistance is therefore intolerable.

 

Iran: Not about nuclear weapons. About one of the final state-controlled hydrocarbon complexes still operating outside Western financial circuits. Its integration would inject fresh collateral into a starving system. Its continued autonomy is a standing reproach. It is also a geopolitical leverage against China, which we will come to in a moment.

 

Russia: It’s not about Ukraine, civilizational values or even NATO expansion directly despite being the proximate cause. The expansion of NATO up to Russia’s borders was intended precisely to either provoke the current war or render Russia militarily neutered for the same purpose. Neutralizing a resource superpower that has demonstrated an alternative model: one in which national wealth backs national sovereignty, not Wall Street derivatives. Russia’s defeat would not only open its own vast reserves to financialization; it would eliminate a proof-of-concept that threatens the pyramid’s ideological monopoly.

 

China: This is the confrontation that clarifies all others. China is not merely another resource-rich state awaiting integration. It is an entire economic civilization organized on a different logic. State-directed. Productive. Building real infrastructure across three continents and accepting payment in resources or local currency rather than dollar-denominated debt. The Belt and Road Initiative is not aid; it is the construction of an alternative collateral network, a parallel system of economic organisation that does not require the perpetual inflation of fictitious claims.

 

This is why China is the existential threat. Not because it competes for hegemony within the existing order, but because it is building an order outside it. Its defeat or subjugation would deliver the ultimate prize: a continent-sized repository of real industrial capacity and productive assets to serve as collateral for the overextended pyramid.

 

The Parasite and Its Host

 

Here we encounter a paradox that the common analysis cannot resolve. If finance capital is globalized, if its elites operate across borders and owe allegiance to no single state, why do they require American military power? Why the fixation on Iran, Russia, and China as national targets?

 

The answer requires us to discard the Lenin-era model of inter-imperial rivalry. We are not witnessing German capital against British capital, American capital against Japanese capital. Contemporary finance capital is genuinely international. It has no home. It holds assets in every currency, operates in every jurisdiction, and extracts value from every continent.

 

But it has no army. It has no capacity to enforce its own conditions of accumulation. It cannot seize oil fields, compel arbitration, or overthrow sovereign governments. It is therefore parasitic—not upon any single host, but upon the residual military capacity of the United States.

This is the true function of the “American” part of the empire in its twilight: not to advance the interests of American national capital, but to serve as the global enforcer for a stateless oligarchy. The dollar is both the currency this oligarchy seeks to transcend and the weapon it wields against rivals. The US military is both the institution this oligarchy starves of funding for its owm ends and the instrument it deploys without limit for geopolitical extraction.

 

The relationship is dysfunctional, unsustainable, and increasingly desperate. But it is the only relationship available. Without American coercion, the pyramid cannot access the collateral it requires. Without the pyramid’s financing, American coercion cannot continue. Each enables the other; each consumes the other; neither can survive without the other.

This is not strength. It is mutual addiction in its final, convulsive phase.

 

The Exception That Cannot Be Tolerated

 

China’s crime is not its size or its military modernization or its “territorial claims.” Its crime is its success.

According to research by Isikara & Mokre, analysing multi-regional input-output tables covering 159 industries over twenty-five years, the cumulative international value transfers from the Global South to the North over this period exceed seventy trillion euros. The largest net losers: Brazil, Mexico, Indonesia, Russia. The largest net gainers: Japan, Europe, the United States.

 

And China? In the 1990s, China was a significant net loser—exploited, like the rest of the periphery, its labour and resources extracted to subsidize Northern consumption. But since the Great Recession of 2008, China has become a net gainer. It has shifted its position in the global hierarchy.

 

How? Not through financialization. Not through the inflation of fictitious claims. Through high investment and technological advance. Through a rising organic composition of capital. Through an economic logic in which investment decisions are less determined by short-term profitability than in any other major economy.

 

China has done what the post-war developmental states did, but at continental scale and in compressed time. It has escaped the condition of perpetual value extraction that defines peripheral status under financialized imperialism. It has built productive capacity and retained the surplus it generates. It has demonstrated that another path exists.

 

This is intolerable. Not because it threatens American jobs or the Indo-Pacific security order or any of the other euphemisms deployed in policy discourse. Because it exposes the pyramid for what it is: not the natural order of economic life, but a specific, contingent, and increasingly dysfunctional mode of accumulation that survives only by foreclosing alternatives.

 

A system that must prevent success elsewhere to sustain itself at home is not a system with a future. It is a system in hospice, kept alive by increasingly desperate interventions that accelerate rather than arrest its decline.

 

The Illusion and Its Exposure

 

Imagine, to return to a metaphor from a previous article in this series, what would happen if the players in a high-stakes poker game realized the bank was empty and they were really just playing for coloured chips.

This is the moment the system fears above all others. Not defeat in any particular conflict. Not the loss of this oil field or that pipeline. The loss of belief. The recognition that the wealth everyone has been chasing exists only as long as everyone agrees to pretend it exists.

 

The hunt for geopolitical collateral is therefore not primarily about the assets themselves. It is about maintaining the illusion that there is something real behind the paper. Each seized oil field, each subordinated central bank, each integrated resource reserve is a signal to the markets: the pyramid still has real foundations. The game still means something. The chips can still be cashed in.

 

This is why the conversion of fictitious capital into real capital is so destructive, even when it succeeds. The collateral consumed in the conversion is not added to the pyramid’s base; it is burned to fuel the illusion that the base exists. The oil fields of Iraq produce less oil under occupation than they did under sanctions. Libya remains a failed-state-hellscape. The Chinese industrial capacity that represents the ultimate prize is also the prize that, if actually pursued through war, would be largely destroyed in the acquisition.

The system is consuming its own future to prolong its present. This is not sustainable. It is not even rational, in any collective sense. It is the behaviour of an organism that cannot recognize its own mortality, thrashing against the inevitable with increasing violence and diminishing returns.

The Choice That Is Not a Choice

 

We are told that the choice before us is between the existing order and chaos, between American leadership and Chinese domination, between the rules-based international system and the law of the jungle. This is the framing of those who benefit from the existing order and cannot imagine—or cannot permit—its replacement.

 

The actual choice is different. It is between the slow asphyxiation of debt-peonage and rentier control, and the catastrophic convulsions of a system that refuses to expire quietly. It is between managed decline and uncontrolled collapse. It is between accepting that the pyramid cannot be saved, and accelerating the wars that will be fought in its name.

 

This is not a hopeful analysis. It does not conclude with policy recommendations or calls for reform. The pyramid cannot be reformed. Its logic is not a set of policies that can be reversed but a structural imperative that has driven every actor within the system, for decades, toward the same destination. The individual players have marginal agency; they are prisoners of a game they did not design and cannot unilaterally exit. Their rational choices, aggregated, produce systemic irrationality. Their short-term survival strategies guarantee long-term extinction. They cannot be rationally appealed to.

 

The only question is how long the propping can continue, and at what cost to the societies being cannibalized. The wars in Ukraine and Gaza, the confrontations in the South China Sea and the Taiwan Strait, the sanctions on Iran and Venezuela, the slow grinding extraction of value from the Global South through debt and structural adjustment—all of these are the cost. They are not unfortunate side effects of an otherwise functional system. They are the system’s essential operating expenses, the price of delaying its reckoning one more quarter, one more fiscal year, one more election cycle.

 

The Violence Turns Inward: The Rise of the Post-Liberal State

 

The current structural crisis of capitalism is not merely an economic downturn; it is a systemic legitimacy crisis that is accelerating the mutation of Western liberal democracies into something far more authoritarian. As traditional avenues for capital accumulation falter and social contracts fray under the weight of inequality, the ruling class is abandoning the pretence of consent in favour of direct coercion.

 

The decades-long drift toward a surveillance state has now crystallized into a fully-fledged digital panopticon, where Central Bank Digital Currencies (CBDCs) promise not just monetary control but the capacity for real-time financial censorship and social credit scoring. This technological infrastructure of control is being normalized on the streets by the visible presence of armed federal agents and the tacit acceptance of anonymous, masked militias who enforce the new normal through intimidation and violence.

 

The once utopian rhetoric of Silicon Valley and the World Economic Forum has soured into a dystopian managerialism, openly dismissing democratic processes as obstacles to efficiency. We must recognize that fascism in the 21st century does not require

 

The Reckoning

 

There will be a reckoning. Not because justice demands it, though it does, and not because the victims of this system deserve relief, though they do. Because the contradictions are now too concentrated and the collateral too depleted. Because a pyramid with a shrinking base cannot grow indefinitely. Because a system that must constantly escalate to survive has nowhere left to escalate.

 

The form this reckoning takes is not predetermined. It could be the catastrophic war that the geopolitical confrontation is preparing. It could be the sudden, quiet collapse of an overextended financial institution that reveals, too late, that the emperor has no clothes. It could be the slow disintegration of American coercive capacity, leaving the global enforcer unable to enforce and the parasitic oligarchy without its host. It could be the continued construction, by China and its partners, of an alternative economic order that simply renders the Western pyramid irrelevant.

 

What it will not be is a return to stability within the existing framework. That framework is exhausted. It has extracted everything extractable from its traditional domains. It has financialized every asset susceptible to financialization. It has subordinated every state vulnerable to subordination. What remains are the powers that cannot be subordinated without war, and the assets that cannot be financialized without destroying them in the process.

 

The terrible irony is that victory in any or all of the current confrontations would not resolve the underlying diagnosis. It would only delay the inevitable, while consuming the collateral that might have supported a genuine transition. The system’s bid for survival through escalation is what makes total collapse—or catastrophic war—most likely. It is the final, fatal logic of a mode of accumulation that has outlived its historical function and now survives only by cannibalizing its own future.

 

There is no moral to this story, no concluding prescription for how to avert the catastrophe. The catastrophe is already underway. It has been underway for decades, wearing the disguises of structural adjustment and financial innovation and humanitarian intervention and great power competition. The task is not to prevent what cannot be prevented, but to recognize it for what it is: not a series of disconnected crises, but one crisis with many fronts. Not a failure of policy, but the successful execution of a system whose success is indistinguishable from its collapse.

 

The pyramid stands, for now. Its peak is invisible, its base is cracking, and its architects are frantically stuffing the last available bricks of real collateral into its foundations. They believe they are saving the edifice. They are only delaying its fall, while ensuring that when it falls, it takes everything down with it.

 

This is not pessimism. It is realism of the only kind that remains useful: the realism that refuses to mistake the system’s survival for health, its escalation for strength, its violence for purpose. The pyramid will fall. The only remaining questions are when, and how, and what we are willing to build from its ruins.