Wolff on the reaction formation of empire

Two things make this Wolff conversation worth slowing down for. The first is that it follows a meeting — Trump in Beijing on 14 May, the second time the two presidents have sat across from each other in seven months — and Wolff has a particular way of reading meetings of this kind. He treats them as the kind of historical document that is mostly what was not said. The second is that he tries out an analytical category economists rarely reach for and historians rarely settle on, and uses it twice: he calls Trump’s foreign-policy gestures, from Greenland to the Maduro raid to the White House ballroom, reaction formation — the psychoanalytic term for a compensating gesture that goes in the opposite direction from what is actually happening. The empire’s territory is shrinking; the maps grow. The empire’s wars are unwinnable; the new ones get bigger. Wolff is partisan; the piece is a guided reading of him as such.

The meeting where one side knew time was on its side

Wolff’s reading of the Beijing summit is not about what was agreed. It is about which of the two men in the room could afford to be patient.

Donald Trump’s 14 May visit to Beijing was the second face-to-face summit between the two leaders in seven months — the first was on the sidelines of APEC in Busan last October — and the choreography of this one mattered. There was an honor guard at the Great Hall of the People, a banquet, a Temple of Heaven walk-through, an invitation for Xi to come to the White House in September. The two sides issued a joint framing of the relationship as constructive, strategic and stable — language Beijing has pushed for since the spring. The deliverables were modest. Some soybeans. A pause on rare-earth restrictions. A toast.

Wolff is uninterested in the deliverables. What interests him is who had the option of patience. China, in his reading, came in with the structural position of being able to lose this meeting and several after it, because the long-run direction it cares about — its share of global output, its share of supply-chain dominance, its share of the developing world’s diplomatic alignment — is moving in its favor at a rate the United States has not been able to slow. Washington came in with no such option. Time, in Wolff’s account, is the asset only one side holds.

The Beijing visit, on Wolff’s reading, looked like the meeting at which one side wanted to manage the transition and the other side wanted to deny that there was one. That is the gap that runs through the rest of the conversation.

The hybrid the West cannot name

The most distinctive move Wolff makes in this conversation is to refuse the available categories for what China is.

The economist’s hat goes on here, in his own framing. China, Wolff argues, is not capitalist in the sense the United States, Britain, or Western Europe are capitalist, because private enterprise is not the dominant form of organizing production and distribution. Roughly half of Chinese economic activity is in state-owned enterprises. China is also not the Soviet Union, which nationalized industry and most of agriculture. It is, in Wolff’s word, a hybrid — about half private (Chinese and foreign) capitalist firms, about half state-owned and operated, all supervised by an extraordinarily powerful party-state apparatus that calls itself socialist with Chinese characteristics. The Anglo-American press, Wolff observes, has never figured out how to name this. So it doesn’t. It calls China capitalist when convenient (China can be sued at the WTO) and authoritarian when convenient (China is geopolitically threatening) and rarely both at once.

What it has done, in Wolff’s reading, is win. He frames the last seventy years as a competition between forms of economic organization — private capitalism (the United States and most of Western Europe), state socialism (the Soviet Union, dissolved in 1991), social-democratic mixed economies (Scandinavia), and the Chinese hybrid. The first model, he argues, is in long-term structural decline. The second collapsed. The third has been hollowed out by financialization and EU fiscal architecture. The Chinese hybrid is the one that, since the late 1970s, has produced the most sustained large-economy growth in modern economic history and lifted the largest population out of extreme poverty in modern economic history. The terms of the comparison are Wolff’s, and a reader can contest any of them. But the underlying empirical anchor — that Chinese real GDP has grown at a multiple of the American rate for four decades — is not seriously contested.

One side knows that it has time on its side. The other one doesn’t.

— Richard Wolff

What development economics did not teach China

The autobiographical thread in this conversation is the part you don’t usually hear from Wolff, and the part the piece is partly built around.

Wolff did his economics PhD at Yale in the late 1960s. The fashionable subfield, the one most of his cohort chose, was called economic development — the discipline that grew up after World War II to explain how poor countries in Asia, Africa, and Latin America could industrialize. The premise of the field, as he describes it now with the self-awareness of fifty intervening years, was that the rich West had figured something out and would teach the rest. American graduate students like him would be trained, would fan out across the global south as UN consultants and World Bank advisors and bilateral aid technicians, and would help. The Marshall Plan was the template. The aspiration, however the speakers themselves would have phrased it, was that the postwar boom inside the United States would become a worldwide pattern under American tutelage.

China was excluded from the project, Wolff says, because China was communist. No Marshall Plan for Beijing. No development missions from Yale. The arrogance, he says, was unselfconscious. The students did not know they were arrogant; the teachers did, and most of them did not say so.

What happened, on Wolff’s reading and on the comparative growth record, is that the countries that received Western development assistance from 1950 to today produced a real but uneven and often modest record of catch-up. China, which got no such assistance — even the Soviet aid program of the 1950s petered out after the Sino-Soviet split — produced a record of catch-up that none of the others matched. The implication Wolff wants the reader to sit with is not that aid hurts (the empirical literature is mixed at best). It is that the model the next generation of developing-world planners will look to, when they ask which path worked, will not be the postwar Anglo-American one his classmates taught. It will be Beijing’s. The intellectual replacement of one developmental template by another, in his reading, is one of the slower-moving but more consequential shifts of this century.

Iran, the Gulf, and the meeting's true backdrop

Wolff’s specific case for the meeting being a transition moment runs through Iran — not through trade.

The Beijing summit happened against a backdrop neither side advertised: the war on Iran that began on 28 February 2026, the war in which an American-Israeli operation styled as decapitation killed Ayatollah Khamenei and roughly thirty senior Iranian officials, the war in which Iran’s son-succession to the Supreme Leader’s office produced exactly the policy continuity Washington had told itself would not happen, the war that has now closed and reopened the strait of Hormuz for nearly three months. Wolff treats the Iran adventure as a microcosm of the larger pattern: an empire trying to do, in Tehran, the kind of thing it used to be able to do, and finding the world has moved.

Wolff’s enumerated list of what the United States wanted from Iran is unusually direct, and worth quoting in his order. Get a regime that sells oil only to American buyers. Detach Iran from Russia and China. Sever Iran’s relationships with Hezbollah, Hamas, and the Houthis. Replace the Islamic Republic with a client government. And, in the more ambitious version of the project, redraw the post-1979 borders to split present-day Iran into multiple smaller successor states — a project that, in Wolff’s argument, exists in continuity with the British-era dismemberments that produced the modern Gulf state map. None of this, on his reading, has happened. The first item has not happened; the second has not happened; the axis is degraded but not severed; the regime adjusted, replaced one Khamenei with another, and is selling oil to China through the same channels as before.

The piece of the Iran story Wolff is most interested in is the Gulf one. He cites — and the Wall Street Journal’s own contemporaneous reporting confirms — that Israel’s Benjamin Netanyahu, during the second Iran war, traveled to the United Arab Emirates to try to assemble a regional coalition to join the campaign. The UAE declined. So did the rest of the Gulf Cooperation Council. The reason Wolff offers — and the reason the Council on Foreign Relations and the Arab Center DC have offered in their own retrospective assessments — is that the Gulf states learned something during this war that they had not absorbed in 2003 or 2011. Hosting an American base, in the missile and drone era, no longer protects you. It makes you a target. Iran’s missile and drone strikes during the war reached US-affiliated infrastructure in Bahrain, Qatar, the UAE, Saudi Arabia, Kuwait, and Oman. The marketing of Dubai as a stability hub, Abu Dhabi as a financial center, Doha as a media capital — every one of those pitches now carries an asterisk that did not exist three months ago. The Gulf, on Wolff’s reading, is in the middle of a slow recalculation, and the recalculation does not go through Washington.

The compensations of an empire that cannot say so

The conceptual move that names the piece arrives here, and Wolff makes it deliberately.

The economic and military positions Wolff has described — relative growth, oil reserves, supply-chain dominance, regional defections — define an empire whose real reach is contracting. The visible gestures of the administration in Washington, he argues, go in the opposite direction. Greenland is to be acquired. Panama is to be reclaimed. Canada is to be a fifty-first state. Nigeria is to be invaded guns-a-blazing. Cuba is to be returned to its pre-1959 status as an offshore gambling paradise. Maduro is to be snatched from his bed in Caracas and put in a federal courthouse in Manhattan — which, Wolff notes, has already happened. The White House East Wing is to be replaced by a four-hundred-million-dollar ballroom modeled on the Great Hall of the People that the president visited in Beijing the same week. The list is not a parody. It is what the administration has said, often through Truth Social, often more than once.

What gives Wolff’s argument its bite is that he refuses the easier diagnosis. The popular reading of Trump’s gestural foreign policy is that the president is uniquely narcissistic, mentally unsuited, transactional in a way no predecessor was. Wolff does not contest that he may be all of those things. He says it does not matter. The role being performed, he argues, is structural. If it weren’t him doing it, the other one would have done it. Joe Biden, Kamala Harris, any of the others — the script that the empire has to read once its real options run out is the same script. The personality of the reader is a second-order question.

The most telling small detail Wolff lingers on is the ballroom request itself. The president, returning from his summit, wrote on Truth Social that he wanted a ceremonial space in the White House comparable in scale to the one in which he had just been entertained by Xi Jinping. The transcripts of his social media posts make the request literal. As metaphor, Wolff says, you could not have written it: the leader of the receding empire wants, in his own house, the scale of the rising one’s reception hall. The script is too tidy. But it is what the president actually said.

The ground that has gone quiet

The last analytical move is the domestic one, and it is the move that explains why Wolff thinks the gestures are coming faster, not slower.

There is a difference, Wolff argues, between the popular Iran war of 1990 and the unpopular one of 2026. In every major American war since Vietnam, public opinion ran patriotic at the start and turned against the war only after the casualties and the bills became real — months in for Iraq, years in for Afghanistan, two years into Vietnam. The Iran war is the first in his lifetime where the majority of Americans were against it from the first day of fighting. The polling bears him out, broadly: AP-NORC, Pew, and Reuters-Ipsos all found majority disapproval of the war within the first two weeks of Operation Epic Fury in March, and the disapproval has not closed since.

The reason, on Wolff’s reading, is not anti-imperial conscience. It is exhaustion. The cost-of-living polls — which by May 2026 had 77 percent of Americans saying Trump’s policies had raised their household costs in their own community — have absorbed the political bandwidth that used to be available for grand foreign-policy projects. There is no constituency left, in either party, for the wars the administration’s foreign-policy class still wants. The administration may keep producing them; the country is not lining up behind them. Wolff frames this as the most underrated structural fact of the next midterm cycle. The November 2026 elections, in his prediction, will be lost by the Republican Party not on Iran but on the ballroom — that is, on the visible mismatch between what the political class is spending money and political capital on and what voters are asking it to spend on. The ballroom is shorthand for the mismatch. So is the additional one-billion-dollar security supplemental request. So is the 13-million-dollar Lincoln Memorial reflecting-pool refurbishment Trump had originally said would cost two. The political damage of these projects, Wolff argues, is not their cost. It is what their cost stands in for.

Coda

What is still uncertain, in Wolff’s account, is whether the United States foreign-policy class will absorb the Iran lesson before the next attempt to perform empire — Cuba, Greenland, a Venezuela follow-on — and whether, if it does not, the next adventure produces a defeat on Iran’s scale or on a larger one. The structural conditions Wolff names — relative growth, supply-chain position, oil reserves, Gulf-state defection, domestic exhaustion — do not predict the timing or location of the next miscalculation. They only predict the pattern.

What is not uncertain, on Wolff’s reading and on the empirical anchors a reader can check independently, is that the comparative position of the two economies has been shifting for forty years in one direction; that the comparative position of their strategic reserves has been shifting in the same direction for a decade; that the war in Iran did not produce the outcomes its planners stated; that the Gulf Cooperation Council declined to join it; and that the visible gestures of the administration in Washington are pointed in a different direction from the visible structural facts. Whether to read those facts as transition moment — Wolff’s phrase — or as one more chapter in a longer-running argument is the choice the reader is left with.

The piece is offered as Wolff’s reading and not as the only one. Wilkerson, in N° 18, reached similar conclusions through a different door. Pape, in N° 12, reached them through escalation theory. Dalio, in N° 01, reached them through 500-year cycles. The convergence is itself worth noticing; it does not, by itself, confirm the diagnosis. What it confirms is that the diagnosis is no longer marginal.