Imperial State Capitalism

Introduction

The contemporary American state is not renowned for its propensity to directly own capital and corporations. Yet, it is worth considering the three following stories, each of which made headlines this year.

I.

On 30 April 2025, the United States and Ukraine signed an agreement establishing a Reconstruction Investment Fund. This US-controlled, jointly managed investment fund will receive revenues from new projects in critical minerals, oil and natural gas in Ukraine. While the governance of the fund has not yet been finalised, the White House lists the US International Development Finance Corporation (DFC) as a key actor involved in the fund’s management. DFC was set up under the first Trump administration as a state-owned development finance institution, with a mandate to invest “across strategic sectors including critical minerals, modern infrastructure, and advanced technology.”

II.

In late May 2025, the eccentric Japanese investor and billionaire Masayoshi Son suggested the creation of a joint US-Japan sovereign wealth fund, after reported discussions with US Treasury Secretary Scott Bessent. The fund would be jointly owned and operated by the Japanese Ministry of Finance and the US Department of Treasury, with the participation of select private investors. It would invest according to the geostrategic priorities of the American state, in sectors such as critical technology supply chains, manufacturing and infrastructure, both domestically and in “allied” countries, while delivering handsome profits to the state and private investors.

III.

A few weeks later, the Trump administration approved Nippon Steel’s $14.9 billion bid for US Steel. The deal had been blocked by the Biden administration on grounds of national security. The acquisition was allowed to take place on the condition that Nippon Steel commits to invest $11 billion in US steel production by 2028 and that the US government obtains a “golden share.” This gives the US government special rights at the company’s board, such as veto power over strategic corporate decisions, notably those affecting investment and employment. In late August 2025, the Trump administration also announced a 10 per cent equity stake in chipmaker Intel.

These three stories lend themselves to easy interpretations regarding the form and content of state intervention under Trump 2.0. One could argue that they exemplify Trump’s taste for the muscular assertion of state power, ostensibly protecting American workers and industry against “Eastern” threats.

These stories can also be seen as illustrating Trump’s art of dealmaking, predicated on extracting concessions from friends and foes alike, at the risk of breaching liberal norms, creating uncertainty for global investors or destabilising markets. In short, these three stories can be seen as demonstrating a mode of state power consistent with Trump’s public persona: from wrestling to politics, an embodiment of masculinist prowess bent on restoring America’s global authority, power and status in a changing world.

There is some truth in this, but an important dimension is missing from such interpretations: the re-embrace of state ownership for geostrategic purposes. What Trump is doing is in the spirit of the times. Governments across the world — from Brazil and Indonesia to Mexico, France, Korea, Germany and Morocco — are reinventing their roles as investors, shareholders and direct owners of capital and assets, after decades of unhinged neoliberalism. ¹

Sovereign wealth funds, policy banks, state enterprises and state-backed venture capital funds have made a decisive comeback, not only as tools to address crises, but also as vehicles to engage in new forms of geopolitics centred on the control of strategic global economic networks. At stake is the ability to shape and utilise the vital networks that connect the world economy, including manufacturing value chains, technological “stacks”, logistical infrastructure, financial systems and energy supply chains. ²

State Capitalism with an Imperial Twist

Governments increasingly inject state ownership in these networks in a bid to exert control over them. They use state-owned corporate entities to strategically invest in critical infrastructure and supply chains, to develop sectors at the cutting edge of the technology frontier, or to acquire equity in firms occupying key nodes in strategic economic networks.

This is not your grandfather’s state capitalism (the domestic public utilities and national oil and gas companies of the postwar era). We are instead talking here of transnational profit-seeking capitalist endeavours. Modern state-owned corporate entities such as state-owned policy banks, sovereign funds, state enterprises and state asset holding companies not only participate in what is supposedly private market activity but do so in a commercial manner. They are well capitalised, highly sophisticated businesses that compete on the world market and perform as efficiently as private sector entities, whether capitalist firms or investment funds. They are also tightly integrated into global economic networks. If anything, the new state capitalism resonates with a much older phenomenon, the chartered “company-states” which acted as vanguards of global capitalism and European imperialism in the seventeenth and eighteenth centuries. ³

Today’s competition includes, but is not limited to, the weaponisation of interdependence — leveraging these networks as a tool to coerce geopolitical rivals. ⁴ For instance, the US state has repeatedly weaponised the dollar payment system to sanction state actors, capitalist firms, individuals or other declared enemies. Network-based competition is also about gaining a competitive edge, carving out a market share, acquiring resources, erecting barriers of entry to competitors, extracting rents, controlling key technologies and intellectual property, and securing financial returns. A very state-capitalist “cold war” indeed.

Because of this battle for geopolitical influence over strategic networks, the connective tissue that meshes the world economy is increasingly structured by commercialised yet geopolitically oriented state ownership. The growing footprint of this new state capitalism is a defining feature of contemporary global capitalism. ⁵

Two Transitions as Catalysts of State Capitalism 

All this is unfolding amid disorderly climatic and hegemonic transitions. The former is characterised by the coexistence of an incipient green capitalist economy and a resurgent fossil empire. The latter refers to the unravelling of the US-led world order, a decaying neoliberalism and reinvigorated imperial and “sub-imperial” scrambles across all continents, many of which play out through the strategic economic networks earlier mentioned.

The interactions between these two transitions are catalysing new forms of state capitalism, whereby state ownership is harnessed to the service of military power, with potentially catastrophic implications for human security and planetary safety. The state is not using its coercive powers to discipline markets or put a check on the power of firms and capitalist elites. Neither is it remaking property relations to democratise the economy, empower workers or coordinate a green transition.

We see instead new fusions of state and private capital, which offer opportunities for profiteering and for fascistic elites to capture the commanding heights of the economy. Nowhere is this dynamic more visible than in Artificial Intelligence (AI) and energy networks. Let’s consider these in turn.

AI Wars

The US, China, European Union, UK and mid-range powers such as Saudi Arabia and Israel are in the midst of “AI wars.” These wars encompass the whole AI supply chain, from critical minerals extraction and processing to semiconductor fabrication plants, data centres and AI algorithms. Political and economic elites portray this pursuit of global leadership in AI as a matter of national security. This is because AI — and related technology such as advanced semiconductors, computational resources, cloud infrastructure and advanced automation — can be applied across an array of production methods and labour processes. On top of that, they are “dual use” technologies: with applications in both military and civilian sectors.

From the perspective of capitalist firms and would-be empires, it is objectively true that missing out on those technologies would mean losses in terms of profits and geopolitical influence. But this narrative is also convenient for both government actors and private capitalists, notably the barons of the military-industrial complex and our new tech overlords: now that “everything tech” is dual use, pretty much anything can be justified on the grounds of national security, including wildly deregulating the AI sector, eliminating safeguards around data protection, surveillance and privacy, pouring huge amounts of public and private money into AI development, and allocating precious energy, land and water resources to data centres.

For these reasons, AI networks have become a terrain of imperial experimentation, including through state capitalism with military objectives. After Russia invaded Ukraine, NATO founded a multi-sovereign venture capital fund, the NATO Innovation Fund, with a mandate to invest €1 billion in start-ups developing frontier defence and security technology. In June 2024, the fund made its first investments in AI, robotics, aerospace and advanced materials. Meanwhile, the two leading digital superpowers, the US and China, are building rival “state-platform capitalist” nexuses, mixtures of state, state-owned and corporate actors working alongside each other in pursuit of geopolitical, economic and security objectives.

The proposal of a US-Japan sovereign wealth fund with a mandate to invest in tech supply chains and infrastructure must be understood in the context of this AI race. Likewise, the US DFC is increasingly involved, with investments worth $300 million in African data centres, in partnerships with Google and Amazon. We also see rapid reconfiguration of the US military-industrial complex, with the growing presence and influence of hawkish Silicon Valley tech magnates. For instance, the chief tech officers of Palantir, Meta and OpenAI have just joined a US Army reserve programme, each carrying the rank of lieutenant colonel.

China also aims to develop and geographically expand its rival state-platform “stack” to shape AI networks. Over the past decade, its government-backed venture capital funds have channelled $912 billion into early-stage firms to help develop strategic AI capabilities. These efforts are accelerating in response to US export restrictions, which have limited the computing resources available to Chinese AI developers. Privately-owned tech giants such as Tencent, ByteDance, Alibaba, Baidu and partially state-owned champions such as SenseTime have scaled up investment, supported by ambitious industrial policies. These firms, while exercising autonomy, are directly linked to the Chinese military and security state and embody new fusions of economic and security imperatives.

China is also building a National Integrated Computing Network, to pool computational resources across public and private data centres. The state-owned China Integrated Circuit Industry Investment Fund, also known as the “Big Fund,” has recently been refunded by six state-owned commercial lenders, to expand investment in advanced semiconductor equipment and materials. The newest phase of investment is worth $48 billion and targets tech giants such as the partially state-owned corporations Yangtze Memory Technologies and Semiconductor Manufacturing International, but also privately-owned firms (such as Huawei-owned HiSilicon) and start-ups. The state-sponsored yet largely firm-driven Digital Silk Road has offered since 2015 an umbrella programme for the international expansion of Chinese tech conglomerates (such as ZTE, Xiaomi, Huawei and China Mobile) and their technological stacks (AI, cloud computing, smart cities, 5G) across the world.

Trump’s visit to Saudi Arabia and the United Arab Emirates (UAE) in May 2025 was partly an attempt to counterbalance Chinese tech footprint in the Middle East and globally. The US sold billions of dollars’ worth of NVIDIA’s most advanced AI chips to the two Gulf countries, and inked agreements for Microsoft and Amazon to establish data centres in the region. The two countries have put state ownership at the core of their ambitions to become regional AI leaders. Saudi Arabia has set up an investment vehicle, wholly owned by its Public Investment Fund, to invest in AI alongside the venture capital arm of Aramco, the Kingdom’s state-owned oil company.

The UAE’s national AI champion, the tech conglomerate G42, is chaired by Abu Dhabi’s royal family and the national security adviser Sheikh Tahnoon bin Zayed, and backed by Emirati sovereign wealth fund Mubadala. G42 is simultaneously developing relations with Chinese military and private actors (including Huawei and ByteDance) and with US firms such as Microsoft, OpenAI, Oracle and Cisco to build a 1-gigawatt compute cluster in the UAE.

Other powers, such as the European Union and Japan, now find themselves caught between the US and China’s rival stacks and state-capital nexuses. They have resorted to state-owned policy banks and infrastructure funds to secure control over their corners of AI networks. In May 2025, the European Investment Fund (jointly owned by European Union members) and CDP Equity (an Italian sovereign wealth fund) announced a €200 million investment in an asset manager fund for data centres and digital infrastructure across Europe. With this, the EU has a double objective: competing in the digital economy and maintaining a degree of digital sovereignty in expanding AI networks. The European Investment Bank is also currently setting up “Tech EU”, a €70 billion investment plan to enhance European AI and semiconductor capabilities, framed as a response to Russia’s invasion of Ukraine, and the Trump administration’s erratic geopolitical behaviour.

Russia’s sprawling state-capitalist sector has not only supported the invasion of Ukraine — with the National Wealth Fund financing the war and major state-owned military and defence conglomerates such as Rostec and Almaz-Antey ramping up production — but this sector is also vital to the country’s AI ambitions. State-owned development banks (including Sberbank and VEB.RF) and strategic investment funds such as the Russian Direct Investment Fund are leading investment in AI tech and infrastructure. ⁶. State-owned firm Rostec also channels equity to high tech start-ups, including the facial recognition national champion NtechLab. Meanwhile, it has helped set up the BRICS+AI alliance, to expand cooperation with BRICS countries in the field of AI projects.

Inter-imperial state capitalist competition therefore structures AI networks, with fundamental implications for our collective digital future. First, the path of AI technological development itself is driven by these fusions of state and private capital, and increasingly embodies their logics: on the one hand, the political imperative of imperial raison d’état against both the “enemy within” and geopolitical rivals, which justifies the uncontrolled harvesting of data geared towards surveillance and repression; on the other, the cold, unconstrained logic of profit and capital accumulation at all costs. As a result, AI mirrors the worst of both worlds (government and market), which everyday destroy a little more of the utopian promise of AI as a technology of human liberation.

Second, state-capitalist AI wars encourage the irrational use and allocation of resources. This includes energy, land and water, which are diverted in ever greater amounts to build data centres and other AI infrastructure instead of satisfying urgent human and ecological needs. Add to that the duplication of investment efforts in AI, fuelled by speculative bubbles, which greatly heighten risks of industrial overcapacity across the board. “Talent” and skilled labour are also poorly allocated: AI workers and scientists who could be developing AI dedicated to solving real problems (such as enhancing healthcare diagnostics) build instead generic algorithms to sell advertisements, capture “audience attention” or control information flows. Perhaps worst of all, it does not seem to matter that no one knows what winning this AI war would actually entail.

State Capitalism in Energy Networks

Similarly, imperial state capitalism is now integral to global energy networks. There is a long and intimate history between fossil fuels and state capitalism. ⁷ Think, for instance, of the nationalisation of oil assets during decolonisation. Today, fossil energy continues to literally fuel state capitalism: the steady extraction of fossil fuels is the material basis for the global expansion of many state enterprises, including national oil and gas companies, and sovereign funds. To paraphrase Marx, state capital comes dripping from head to foot, from every pore, with crude oil, coal and noxious gas fumes.

What is new, however, is that state capitalism has cemented its presence at the very heart of the incomplete energy transition. Consequently, and as detailed below, the imperative of militarised geopolitical competition and private profiteering increasingly determines green technological choices and energy pathways. The remaking of clean tech and renewables supply chains serves nationalist or imperialist interests rather than visions of social justice and fairness in the governance of the transition. The strategic resources we need for the transition, such as critical minerals and rare earth elements, are diverted to the growing demand of military applications, on the bases of extractivism, when their rational allocation would facilitate a coordinated global transition. Imperial state capitalism is hijacking the transition and the promise of a decarbonised economy.

This is because state capitalism acts as a hinge between fossil-based and renewable energy networks in at least two ways. First, governments use state ownership to “switch” from oil, coal and gas revenues into green capital, to entrench the power of domestic elites within an emerging “green economy” rather than to foster a democratic transition that genuinely caters to the needs of local communities. ⁸ They mobilise state enterprises, sovereign funds, state venture capital funds and other state-backed entities to directly invest (or to co-invest with the private sector) in green infrastructure, renewables and clean tech, with the hope of becoming globally competitive green energy powerhouses. For example, the Public Investment Fund is ramping up investments in clean tech and renewables to position Saudi Arabia as a world leader in clean power. UAE renewable energy firm Masdar (owned by Abu Dhabi National Oil Company and sovereign fund Mubadala) is investing in clean power capacities in the UAE and in solar and wind projects around the world, from Australia and Barbados to Mauritania, Jordan, England and Uzbekistan. These strategies serve a double objective of geoeconomic repositioning and domestic elite reproduction, in a world that haphazardly transitions away from fossil fuels.

Brazil is meanwhile using its state-owned oil giant Petrobras to diversify across different segments of petrochemicals supply chains, but also to extend its presence in green energy networks, investing for instance in biorefining and renewables, and in sustainable aviation fuels. ⁹. In 2024, Malaysia’s state-owned Petronas, one of the largest exporters of liquefied natural gas in the world, set up Gentari, a firm tasked with helping deliver renewable energy, hydrogen and green mobility solutions. India’s state owned firms, such as IndianOil and power giant NTPC, are at the core of the government’s strategy to develop the green hydrogen sector and solar projects.

Norwegian state-owned energy champions Equinor and Statkraft leverage their immense capital, expertise and investing firepower to position Norway at the centre of transnational global fossil fuel and renewable energy networks. Russia is also switching capital across energy sectors, as it navigates both its dependence on oil and gas and western sanctions. State-owned gas giant Gazprom is channelling some gas revenues into so-called “white” hydrogen investment in Siberia, while state corporation and nuclear leader Rosatom bets on “low-carbon” hydrogen and wind projects across Russia, in collaboration with state-owned development fund Rusnano.

The second way in which state capitalism acts a hinge in the climate transition is that governments increasingly resort to state ownership in their competition over the supply of critical minerals, rare earth elements and magnets. These are each vital to both the energy transition and tech applications, such as weapons systems, and have therefore emerged as a fundamental to what political scientist Thea Riofrancos calls the “security-sustainability nexus.” In the face of China’s dominance of the entire transnational supply chain of a range of critical minerals — which the state has previously weaponised via export controls on gallium, germanium and antimony — rivals are mobilising state-owned investment funds and policy banks, both at home and abroad.

This March, a White House Executive Order directed DFC to create a domestic mineral fund to increase American production. In early June, the US Export-Import Bank extended a $120 million loan to Critical Metals Corp for Greenland rare earth mining as part of a programme to support companies that compete with China. A few weeks later, the Pentagon took a $400mn equity stake (the equivalent of 15 per cent) in MP Materials, the US’ largest rare earths producer, and struck a deal to buy its output for ten years at double the market price. Apple also committed to buy $500mn of “American-made” rare earth magnets from the same company over the next four years. In October, the US Department of Energy took a 5 per cent equity stake in Lithium Americas, and a separate 5 per cent stake in the company’s Thacker Pass joint venture with General Motors, set to be the largest lithium source in the Western Hemisphere. A few days later, the US Department of War announced a 10 per cent stake in Trilogy Metals, with options for increased ownership contingent upon the completion of key infrastructure, including Alaska’s Ambler Access Road.

In May 2025, the European Investment Bank launched a new initiative doubling its investment into critical raw materials projects across the entire value chain in and outside EU. This is portrayed as “crucial for Europe’s green and digital transitions and essential to ensure the global competitiveness of European industry, including in the area of security and defence and aerospace.” Some EU members such as Germany, France and Italy recently launched their own mineral funds to develop minerals supply chains.

Russia’s Rosatom is building an entire lithium and rare earth supply chain. It set up a joint venture Polar Lithium (with mining leader Nornickel and in partnership with state-owned China Metallurgical Group Corporation) to exploit Russia’s largest deposits in the Arctic. Rosatom’s subsidiary, Uranium One Group, is one of the world’s largest uranium miners with a diversified portfolio of international assets in Kazakhstan, Tanzania and Namibia, and has partnered with Bolivian state-owned Yacimientos de Litio Bolivianos to build a lithium carbonate industrial facility on Salar de Uyuni.

The UAE’s state-owned investment funds (such as Dubai Investment Fund) and state-owned conglomerates (such as Emirates Steel and International Resources Holding) have embarked on a series of deals, joint ventures, and acquisitions in mining operations across multiple geographies, including Pakistan (bauxite), Zambia (copper), Burundi (nickel), Brazil (tantalum) and Botswana (lithium). The UAE is building a parallel ports and logistics empire through the intermediary of powerful state enterprises, such as AD Ports Group and DP World, and sovereign wealth funds such as the Abu Dhabi Developmental Holding Company, to facilitate minerals acquisition and influence over strategic maritime transport routes. This is part of UAE’s green ambitions and project to become a defence industry leader.

Resisting the Explosive Cocktail of State and Capital

State-owned investment funds and corporations are the shock troops of new AI and critical mineral wars, along with national security agencies, defence contractors, tech giants and energy and mining conglomerates. Propelled by the climatic and hegemonic transitions, these dangerous, military-imperial forms of state capitalism are confiscating our collective right to a safe, green, tech-powered future.

Reclaiming this future, and safeguarding planetary and collective safety, demands that we reckon with this global political-economic formation, whereby capital is simultaneously concentrated as property in the hands of powerful states and spatially distributed across the connective tissue of globalisation. Like liquid mercury, state-owned capital flows and aggregates around the key nodes of strategic networks, to secure control, power and influence, and to generate profits for the few. ¹⁰

This socialisation of property under the aegis of the state does not get us any closer to a democratised and sustainable economy. Capital as state property is not inherently better than capital as private property. State-owned capital can be just as socially and environmentally destructive as privately-owned capital, particularly when it is harnessed for militarised competition and imperialist scrambles over tech and resources.

What we need in response is a renewed case for internationalism and pacifism against warmongering and imperial militarism. We must categorically reject ever-encompassing notions of national security, which are justified to extend the empire of state and capital over our lives. New hybrids of state and corporate capital fortify the power and wealth of a minority of ruling elites who control the levers of the digital, fossil and green economy. The result is increasingly violently authoritarian at home, while the world dangerously edges closer toward global war.

Against imperial state capitalism, we must advocate for democratic planning and collectively owned economies, featuring diversified landscapes of democratically controlled public institutions, and driven by objectives of planetary sustainability, transnational coordination and ecological solidarity. This is to build a new world that not only ensures a liveable future for all but also enable full individual and collective human realisation on a fragile planet.