In a detail almost too strange for satire, a Silicon Valley billionaire recently called for the U.S. government to take an ownership stake in the largest AI companies, and the Wall Street Journal accused him of “socialism.”
This bizarre moment came only a year after the Trump administration started building a portfolio of U.S. government equity stakes in roughly thirty companies—chipmakers, rare-earth miners, quantum computing firms, defense contractors—while commissioning tech executives from Palantir, Meta, and OpenAI as officers in the U.S. Army Reserve, and deploying AI-powered surveillance tools against migrants, university faculty, and the Palestine solidarity movement. The same administration has moved to secure privileged access to Venezuelan oil and mineral wealth through direct state-backed arrangements as it escalates military pressure on Caracas and has structured a “Reconstruction Investment Fund” in Ukraine, claiming a share of the country’s mineral, oil, and gas revenues as the price of continued American military support against Russia.
Similar geopolitical instruments are being extended well beyond that one conflict: Washington has struck critical-mineral equity and offtake arrangements with the Democratic Republic of Congo, Zambia, and Kazakhstan, and is negotiating comparable access to Brazilian rare earths—a rapidly expanding map of resource deals in which U.S. state ownership now sits directly alongside, and in competition with, Chinese and Gulf capital in some of the same mines. Other governments, from East Asia to Western Europe, also now extensively use government equity stakes to protect firms and infrastructure occupying key nodes in AI supply chains, such as sovereign cloud platforms and mega data centers, and to sponsor so-called “sovereign” military technologies.
None of this fits comfortably into the vocabulary we normally use to describe contemporary politics and economics, whether “neoliberalism,” “deglobalization,” or “populism.” It requires a different name, and a different concept. I call it imperial state capitalism: the fusion of a resurgent global drive toward state ownership with a turbulent reconfiguration of empire, with each process feeding and destabilizing the other. This explosive fusion is real and rapidly intensifying, fueling geopolitical and imperialist scrambles abroad, while deepening illiberalism at home—in the United States above all, but in many other countries around the globe as well, with dangerous implications for human safety and planetary security.
Imperial state capitalism is the fusion of a resurgent global drive toward state ownership with a turbulent reconfiguration of empire.
An Old Weapon Sharpened
It’s tempting to think of the U.S. federal government buying equity in Intel, or Gulf sovereign funds pouring hundreds of billions into AI frontier labs and data centers, as something genuinely new. It isn’t. States have used ownership as a strategic weapon for as long as capitalism has had a global dimension. And competition between rival imperialist powers has repeatedly compelled states to reinvent their economic role as direct owners of the most strategic or capital-intensive means of production, extraction, and destruction—from precious metals and plantations in the 16th century, to colonial trade and infrastructure in the 19th century, to heavy industry and armaments in the 20th century. Today’s frontier technologies and critical sectors, from semiconductors to critical minerals, are the next iteration in this long history of state capitalism.
Today’s frontier technologies and critical sectors, from semiconductors to critical minerals, are the next iteration in this long history of state capitalism. Importantly, this history is inseparable from that of empire, warmaking, and settler colonialism.
Importantly, this history is inseparable from that of empire, warmaking, and settler colonialism. In 1875, for instance, facing Egypt’s fiscal collapse, the British government seized the chance to buy the bankrupt Khedive’s 44% stake in the Suez Canal Company—a large minority holding it used, seven years later, as part of the justification for the military occupation of Egypt. In 1914, Britain took a 51% controlling stake in what later became BP, specifically to guarantee fuel for the Royal Navy ahead of the First World War. Israel’s settler-colonial economy was substantially built, before the state itself existed in Palestine, by a trade-union holding company that functioned as a surrogate capitalist class, while its construction company built roads, airports and counterinsurgency infrastructure for the British colonial administration. During the Second World War, the United States built and outright owned a nickel-processing plant in Cuba to secure a strategic metal, and it built government-owned, contractor-operated war factories to produce planes, tanks, ammunition, and weapons. In the postwar period, state ownership extended into advanced and dual-use technologies and industries, including nuclear power, telecommunications, aerospace, computing, and pharmaceuticals (EDF and Airbus being paradigmatic cases).
What is genuinely new is the speed, scale, and concentration with which the old weapon of state capitalism is now being redeployed.
Contrary to what Lenin and Bukharin once argued, state capitalism is not some terminal, degenerate stage of monopoly capitalism, fated to produce one last inter-imperial war. Imperial state capitalism is better understood as an enduring historical phenomenon that has been repeatedly activated during periods of intense tensions in the global structure of empire, each time with long-lasting consequences. It opened entire technological trajectories and areas of specialization, notably related to the defense-industrial base, which fueled imperial violence, global militarism, and the suppression of internal dissent. And it repeatedly served as the crucible in which new ruling classes formed in and around the state. This is precisely what is happening today, as the world enters a period of chaotic inter-imperialist disorder. What is genuinely new is the speed, scale, and concentration with which the old weapon of state capitalism is now being redeployed, and the political form it is taking as it comes home to roost.
The Great Acceleration
Over the past year, the U.S. federal government has taken equity stakes in around thirty companies, including a $100 million stake in quantum computing firm Rigetti, 15% of the rare-earth miner MP Materials, and a $1 billion holding in part of defense contractor L3Harris. France has quietly assembled a comparable portfolio through its state shareholding agency, holding equity across some 88 companies—including sizeable stakes in the defense and aerospace firms Thales, Safran, and Airbus—while a dedicated vehicle, Lac1, buys stable, long-term positions in listed French multinationals specifically to shield them from hostile takeovers. South Korea, flush with tax revenue from its AI-driven chip boom, has made direct equity investments in domestic AI firms, including $166 million in the chip designer Rebellions and $93 million in the language-model startup Upstage. Abu Dhabi’s sovereign vehicle MGX closed a $49 billion AI investment fund in mid-2026, holding stakes in OpenAI, Anthropic, and xAI simultaneously. Saudi Arabia’s PIF has committed roughly $100 billion to its state-owned AI champion HUMAIN. China’s state-directed venture funds have channeled an estimated $912 billion into early-stage tech firms over the past decade. Sovereign wealth funds worldwide now back roughly two out of three of the world’s largest mega-unicorns valued above $5 billion. This is a level of state-ownership activity that, in earlier eras, would have taken decades to build.
Crucially, they aren’t scattering this capital randomly. State capital is targeting a single, tightly interlinked technological stack: AI labs, the data centers and chips that power them, the critical minerals that go into that hardware, the energy that runs it, and the military technologies increasingly built on top of it. These sectors are strategic because they are general and dual-use technologies. They are targeted together precisely because they are already interconnected—through corporate ownership, supply chains, and circular financing—and because they represent almost the only genuinely dynamic corner of an otherwise stagnating world economy. According to the UN Conference on Trade and Development, AI infrastructure, semiconductors, critical minerals, and energy-transition technologies together accounted for 44% of all global greenfield investment value in 2025, up from just 16% in 2020.
State capital is targeting a single, tightly interlinked technological stack.
Why has the minority equity stake become the instrument of choice? Because it solves several problems simultaneously that older tools cannot. It is far faster than building a state R&D institution from scratch. Injecting equity in private firms allows for exerting control over supply chains, capturing key nodes, reducing chokepoint vulnerabilities, and excluding competitors. Minority equity attracts, rather than crowds out, private capital, since sovereign backing can signal credibility. It is politically easier to sell as “a stake for taxpayers” than as nationalization. And it operates entirely within, rather than against, the postwar architecture of investment treaties and arbitration tribunals that was built specifically to make outright expropriation costly after the wave of Third World nationalizations in the 20th century. In short: equity is the instrument precisely calibrated to a world where the technological frontier is faster-moving, more globally financialized, tightly structured around economic networks, and more legally constrained than it was for the state capitalists of the 1930s or the 1970s.
Imperial Violence Abroad, Authoritarianism at Home
This is not simply a story about aggressive foreign policy and geopolitics. Much like previous instances of imperial state capitalism, the same fusion of state power and capital reshaping the world order abroad is producing a distinctive and dangerous political formation at home. This is where readers concerned with illiberalism should pay closest attention.
The same fusion of state power and capital reshaping the world order abroad is producing a distinctive and dangerous political formation at home.
Consider what is actually happening inside the United States. National security agencies, defense contractors, energy and mining conglomerates, and Silicon Valley executives are no longer merely doing business with one another; they are fusing into a single, barely distinguishable power bloc. Tech leaders sit on boards of directors one week and hold military reserve commissions the next. The Pentagon takes direct equity stakes in the same companies supplying it with autonomous weapons. Palantir, whose data-analytics infrastructure increasingly underpins both military targeting and domestic immigration enforcement, has become something like the connective tissue of this new formation. This is not incidental privatization of public functions, nor is it simply corporate capture of a weak state. It is a genuine merger, in which state ownership, private capital, and coercive power are becoming a single instrument wielded by a single, if internally competitive, elite bloc.
The surveillance infrastructure built to secure this bloc’s position abroad is being turned inward with striking speed. The same AI-powered targeting systems refined in the machine-assisted killing of Palestinians in Gaza—where an Israeli system called Lavender used machine learning to assign residents a numerical score estimating the likelihood of militant affiliation, with human officers largely rubber-stamping its recommendations—are part of the same technological and institutional ecosystem now being adapted for use against a shifting roster of domestic “enemies within”: migrants, the Palestine solidarity movement, the “woke” left, university faculty, and so on. The so-called Department of War recently signed agreements with OpenAI, Anthropic, Google, and xAI to bring generative tools onto classified military networks. Claude, the AI model developed by Anthropic, was reportedly used by the U.S. military during its operation to bomb Venezuela and kidnap President Nicolás Maduro.
State ownership formalizes the fusion of big tech capital and state coercive power.
The injection of state ownership is but one form that mediates the growing structural interdependence between states and tech giants. It formalizes the fusion of big tech capital and state coercive power against a backdrop of economic stagnation, manufactured internal enemies, and resurgent imperialism. Powered by AI and related technologies, this directly empowers a new class of tech oligarchs and state bureaucrats and deepens their power over the commanding heights of the economy.
None of this is confined to the United States, even if it is currently sharpest there. Russia’s wartime economy fuses state oil revenue, defense-industrial conglomerates, and an AI-powered repression stack (including a state-linked facial-recognition champion) into a single apparatus of accumulation and control. Gulf monarchies are building sovereign AI champions with explicit dual civilian-military mandates, run by the same state security elites who control their sovereign wealth funds. The EU and European states, caught between rival stacks, deploy state capital to strategically sponsor so-called “sovereign” military technologies, domestic AI champions, and digital infrastructure. Governments use these very same tools for domestic surveillance, predictive policing tools, and social media tracking under the guise of security.
In short, the specific ideological coloring differs sharply from case to case. And the specific tools and instruments deployed will change depending on a country’s position in the imperial order and in the international division of labor. Imperial state capitalism is indeed a diversified phenomenon. But the underlying institutional logic—capital, state ownership, state-private hybrids, and coercive power concentrated into the hands of a single governing bloc, such that economic ties and political loyalty become the same relationship—does not. What is distinctive, and more alarming, about the American case is the speed of the fusion, the frontier character of the technology involved, and the fact that it is being built inside a state that still, for now, retains the world’s most powerful military and financial architecture.
Contesting Economic Ownership and Property
Yet this moment should not be read only as catastrophe. State ownership has always been a genuinely dual instrument: one through which powerful states have expanded global capitalism, enforced imperial domination, and waged war, but also one through which Third World states have asserted claims of sovereignty over economic resources, however imperfectly. This dual nature remains true today. If a tiny clique of elites can employ state capitalism as a tool of private profiteering and authoritarian consolidation, there is no reason the same instruments cannot be radically repurposed and democratized, in the service of a project of post-capitalist transition. The fundamental question is this: how to remake ownership and property relations to democratize the economy, empower the majority, and coordinate a green transition.
If a tiny clique of elites can employ state capitalism as a tool of private profiteering and authoritarian consolidation, there is no reason the same instruments cannot be radically repurposed and democratized, in the service of a project of post-capitalist transition.
Defending democracy today cannot mean defending liberal rights, the courts, and the ballot box alone. It has to mean contesting who owns the chips, the data centers, the surveillance technologies, the mineral and energy resources, and the companies now drawing an ever-thinner line between the state’s balance sheet and its capacity for coercion and violence, both at home and abroad. The instruments of imperial state capitalism will not hand us that future on their own. But by making the question of who owns and controls economic power and resources newly visible, they have made it newly contestable too. That contest should be front and center in the fight for a just and livable future on this planet.
Ilias Alami teaches political economy at the University of Cambridge, where he writes about capitalism, geopolitics, global development, the green transition, and global finance. He is the co-author of The Spectre of State Capitalism.
The banner image used in this article is in the public domain.
