Wolff on the watchword that became just-in-case

Richard Wolff is a particular voice. Marxist economist, professor emeritus at the University of Massachusetts Amherst, longtime host of Economic Update and co-founder of the worker-cooperative-advocacy outfit Democracy at Work, he has spent forty years arguing — to use his own terms — that American capitalism is unstable by design, that its empire is in decline, and that its working class has been hollowed out by the offshoring of manufacturing in ways its politics has not yet absorbed. He is, openly, partisan. The reason to read him anyway is that his diagnosis of this particular moment — the moment after Iran began turning the strait of Hormuz on and off at will — is more structural than partisan, and the structural piece travels. In conversation this weekend with the independent broadcaster Danny Haiphong, Wolff offered a compressed version of that diagnosis. What follows is a guided reading of it.

The watchword has become just-in-case

For forty years the operating principle of global production was just-in-time. Wolff’s reading is that the principle has flipped, and that the country best positioned for the flip is not the United States.

The phrase Wolff anchors his argument to is not his coinage. It belongs to a decade of supply-chain literature that has been working out what to call the world after the pandemic and the wars. Just-in-time, the orthodoxy that ran from the 1980s into the 2010s, treated inventory as a liability. Capital tied up in a warehouse was capital not earning. Computerised production let firms order the bolt the day before it was installed and the chip the day before it was soldered. Toyota built the model; the rest of the world copied it; consultancies sold it back to itself. Wolff’s example is from his own life — his publisher used to print books and warehouse them; now it prints books only when an order is in. The whole supply chain ran lean. The whole supply chain assumed nothing would interrupt it.

What is now widely called just-in-case manufacturing — a term used by the Financial Times’ Rana Foroohar, by the World Economic Forum, by procurement-leadership consultancies, and by the Jabil and Cardinal Health post-mortems on the COVID-19 supply collapse — runs in the opposite direction. Inventories are an asset. Redundant suppliers are an asset. Storage capacity is an asset. The pandemic, the Ukraine war, the Houthi closure of the Red Sea, and now the Iranian blockade of Hormuz have each in turn forced the same question: what does a firm, or a country, do when the link it depends on simply stops? The answer, increasingly, is that you store.

This is where Wolff’s reading turns concrete. China, on the EIA’s most recent assessment, holds the largest strategic oil inventory in the world — about 1.4 billion barrels when state and large commercial reserves are combined, against the roughly 824 million the United States held across its Strategic Petroleum Reserve and commercial inventories before this year’s coordinated emergency release. Beijing began accelerating that build after Washington’s 2018 semiconductor restrictions, and accelerated it again after Ukraine. The pattern is not confined to oil: China is the largest holder of fertilizer reserves, the largest holder of grain reserves, and is constructing eleven new strategic crude-storage sites through this year and next. Wolff notes, dryly, that the Philippines, Japan, South Korea, and India have asked Beijing to share from those stockpiles in the current squeeze; the answer he has heard is that the storage was for China.

The point Wolff draws from this is not that China is virtuous; it is that China is prepared. In a world where shocks are now the operating environment rather than the exception, the country with the storage is in a different position from the country with the spreadsheet. The cost of just-in-time was paid in inventories; the bill, when it came, came all at once. The cost of just-in-case is paid in warehouses and railways and pipelines; the benefit, when the next shock arrives, is that the system does not stop. Wolff’s reading is that every multinational company and every government with international supply chains is, quietly, recalculating where to produce, where to store, and which routes to assume will function. The whole world economy is being rewired. The rewiring will not be reversed when Hormuz reopens.

The deal that recycled dollars back to Washington

The post-1973 arrangement that priced oil in dollars and sent the surpluses back into U.S. Treasuries gave the United States something close to a free borrowing facility for fifty years. Wolff’s reading is that the structural piece is now broken.

To understand why this matters, Wolff goes back to the 1970s. The United States ended the Second World War in a position no country had occupied before or has occupied since. Every other industrial power — Britain, France, Germany, Italy, Japan, the Soviet Union, China — had been physically destroyed by the two world wars; the United States, protected by oceans, was not. The dollar replaced the pound as the global reserve currency overnight. American factories ran the world for thirty years. Then, by the 1970s, the rebuilt European and Japanese economies had begun to catch up — Wolff’s small detail is that Americans had started buying Volkswagens and Datsuns rather than Fords and Chevrolets — and the unique American position was visibly ending.

The response was a particular kind of deal. With Bretton Woods unwound after Nixon closed the gold window in 1971, the United States arranged with Saudi Arabia, and through Saudi Arabia with the rest of the Gulf, that oil would be priced and sold exclusively in dollars. Every country that needed oil — which was, increasingly, every country — needed dollars to buy it. Central banks held dollars in reserve to make those purchases. The Gulf, swimming in dollar receipts beyond what it could spend, was offered a desk at the U.S. Treasury where the surplus dollars could be invested in U.S. government securities. The dollars came in, the Treasuries went out, the interest accumulated, and the system recycled itself.

What that arrangement bought the United States, in Wolff’s account, was an extraordinary degree of freedom from the constraints other countries face. The American government could borrow at scale, cheaply, from a permanent foreign clientele that needed somewhere to park its dollar receipts. It could finance wars — Vietnam, the Gulf, Iraq, Afghanistan — without raising taxes on its own population. Wolff’s point about Vietnam is sharper than the throwaway it appears as: had Washington been forced to tax the American working class for the cost of that war, the domestic opposition would have ended it long before it ended itself. The petrodollar system was, among other things, a mechanism for converting global oil demand into a permanent domestic war-finance facility.

That arrangement requires two conditions. The first is that oil-producing countries continue to price and settle in dollars. The second — less discussed and more structural — is that the United States can credibly protect the oil-producing countries from anyone who might dislike the deal. American military bases in Qatar, Bahrain, Saudi Arabia, and the U.A.E. were the visible side of that protection. Wolff’s reading of the last two months is that both conditions have come under pressure at the same time.

On the protection side, Iranian missile and drone strikes in March hit Qatar’s Ras Laffan complex — the world’s largest LNG processing hub — and took roughly 17% of Qatar’s LNG export capacity offline for what QatarEnergy’s chief executive estimates will be three to five years. The damaged units cost about $26 billion to build. The Al Udeid air base, the largest American installation in the Middle East and the supposed deterrent against precisely this kind of attack, did not deter it. On the pricing side, the question of whether the Gulf will keep settling its trade in dollars is no longer a hypothetical conversation conducted in BRICS communiqués; it is a question every Gulf central bank is being forced to think about as the credibility of the American security umbrella thins.

Debt that does not produce

There are three kinds of debt — government, household, corporate — and all three are at or near records in the United States. Wolff’s distinction is between debt that builds something and debt that does not.

The case Wolff builds against contemporary American borrowing is not the conservative one about “living within means.” It is more specific. Lending, in his account, is productive when the borrowed money is used to produce goods and services that did not previously exist; the lender is repaid out of the new output, and both sides are better off. Lending becomes destructive when the borrowed money is used for none of those things — when it finances corporate share buybacks that elevate the price of existing equity without creating any new productive capacity, or when it covers household consumption that wages no longer support. In those cases the borrower has nothing new with which to repay; the interest the lender extracts is simply transferred from the borrower’s future income.

By Wolff’s reckoning, most of the borrowing now happening in the United States is the second kind. Auto-loan debt in the U.S. exceeded $1.6 trillion at the end of last quarter. Credit-card revolving debt is near record. Student-loan balances are stuck where they have been for years. And corporate borrowing, in significant part, is used to repurchase the corporation’s own shares — which raises the share price for the existing owners (the top decile of American households owns roughly 80% of equities) without expanding the firm’s productive base.

Nobody talks about a declining empire. It is a taboo topic.

— Richard Wolff

On the public-debt side, the numbers tell their own story. U.S. federal debt held by the public surpassed annual GDP in March, for the first time since 1946. The gross national debt crossed $39 trillion that same month. Net interest now exceeds defense spending in the federal budget and is projected to consume more than 30% of federal revenues within a decade. All three of the major credit-rating agencies have moved the United States below AAA — Standard & Poor’s in 2011, Fitch in 2023, Moody’s in May 2025. The country sits, on credit terms, alongside South Korea, Austria, and France rather than alongside Canada, Australia, or Germany, where its old peers remain.

Wolff’s claim about Wall Street is that the first uncertainty has now entered the auction room. Treasury issuance in 2026 is on pace to exceed $2 trillion of new borrowing on top of the rollover of existing debt. The buyers exist — but the questions they ask before bidding are different from the questions they were asking five years ago. The premium on duration is rising. The IMF warned in April that the window for orderly fiscal adjustment is narrowing. None of this is a default scenario, and Wolff does not predict one. What he predicts is that the borrower of last resort eventually has to pay more to borrow, and that the more it pays the less room it has for everything else.

A military built for the wrong war

The Trump administration has proposed a $1.5 trillion defense budget for fiscal 2027 — a 44% jump, the largest year-over-year increase since the end of World War II. Wolff reads this as a doubling-down on a model of warfare that has already lost.

The budget request, formally proposed in late April, is built around what the administration calls “Presidential Priorities”: Golden Dome missile defense, hypersonic weapons, sixth-generation fighters, eighteen new warships under a “Golden Fleet” initiative, the B-21 Raider stealth bomber, and a near-tripling of spending on drone and counter-drone systems. The list reads as a high-end inventory upgrade of the platform the U.S. has built since 1945: a force structure that assumes that whoever controls the sky wins, that high-cost platforms project decisive power, and that adversaries cannot match the technological gap.

Wolff’s point is that the gap has closed in the only direction that matters. The technology of warfare has produced a category of weapon — the cheap, mass-produced, software-guided drone — that inverts the cost asymmetry on which the U.S. force structure rests. He puts the case as a slogan: $15,000 drones knocking out $10-billion aircraft carriers. The slogan compresses a real phenomenon — the lessons coming out of Ukraine, where loitering munitions priced at low five figures have killed armoured vehicles priced in the millions, and out of the Red Sea, where Houthi-launched anti-ship missiles costing tens of thousands have forced container shipping to reroute around an entire ocean. The U.S. has, Wolff argues, invested its money in a class of platform that the rest of the world is learning how to negate.

The wider portfolio of instruments the United States has used to project power outside conventional warfare is also fraying. Trump’s signature tariff push was substantially blocked by the Supreme Court earlier this year, removing what the administration had counted on as a revenue offset for everything else. The sanctions regime — applied with growing reach to Russia, Iran, North Korea, Cuba, and others — has produced its own response: a circuit of trade and finance that routes around dollar-denominated infrastructure, painfully but viably. The interventions themselves have not delivered. Wolff is not generous about Ukraine, and not generous about Iran. His point is simpler than the politics: the instruments are not producing the results.

The defense increase is not, on Wolff’s reading, a sign of confidence. It is a sign of the opposite. A power that was confident in the effectiveness of its existing posture would not be asking for a 44% increase under wartime supplemental on top of a base budget already larger than the next nine militaries combined. The increase is what late empires do — they spend more on the instruments that have stopped working, because the political cost of admitting they have stopped working is higher than the financial cost of doubling them.

A declining empire that cannot admit decline

The coda, in Wolff’s reading, is not the war itself. It is the strange smaller theatres in which a declining empire performs strength when strength is no longer available.

The example he reaches for is the running campaign of U.S. military strikes against alleged drug-trafficking boats in the Caribbean and Eastern Pacific, in operation since September 2025. As of early May, at least 188 people have been killed in about fifty strikes on small vessels — most of them off the coast of Venezuela, none of them subject to anything resembling judicial process. Human-rights bodies, including the Inter-American Commission on Human Rights and UN special rapporteurs, have characterised the strikes as extrajudicial killings. Domestic legal scholars across the political spectrum — including figures from the Bush and Obama administrations — have called them lawless under both U.S. and international law. The strikes have continued. They are now described by the administration’s allies as a routine hemispheric counter-terrorism operation.

Wolff’s reading of this is not primarily legal. It is theatrical. Domestic U.S. drug trafficking is prosecuted through arrests, lawyers, juries, and sentences; it is not a capital crime under federal law. The decision to handle the maritime version of the same conduct through missile strikes is, in his account, a small but legible piece of evidence that the political logic of the moment is performance rather than policy. The strikes accomplish very little in terms of disrupting drug flows — the U.S. State Department itself has long acknowledged that almost all fentanyl enters the country by land — and the administration’s own messaging has shifted from interdiction to “demonstrating strength.” Empire, in Wolff’s reading, is what you do when you cannot do empire anymore.

The harder claim Wolff makes is the one in the pull-quote — that nobody, in the American public conversation, will say the word decline. The taboo is bipartisan. Republican framings refuse it as defeatist; Democratic framings refuse it as un-American; the foreign-policy establishment refuses it because it would imply the establishment has been wrong for a generation. The refusal has a political cost, which is that no plan is constructed against a problem that cannot be named.

What is left in the conversation, then, is two kinds of work. The first is empirical: cataloguing the events as they happen — the Hormuz closure, the LNG strikes, the carrier vulnerability, the Treasury auctions, the boat strikes — and resisting the impulse to fit each one into the optimistic story by itself. The second is conceptual: holding open the framing Wolff insists on, that these are not isolated stories but pieces of a single rewiring, and that the rewiring has a direction. The direction is from a world organised around the assumption of American capacity to a world that has begun to organise around its limits.

What is uncertain is the pace. Wolff is bearish on Treasury demand and on the post-Hormuz oil market; he is more cautious about timelines, and right to be. What is not uncertain is the inventory build in Beijing, the missile damage at Ras Laffan, the credit downgrades on file, and the gasoline prices at the pump. Those are facts in the world. What a reader can do with the rest is hold it as a thesis to be tested against the next quarter — and the one after that.