The Return of the Political: Why the Age of Markets is Over

This is one of the best and most important conversations I’ve ever had. Dr. Ralph Schoellhammer is an Austrian political scientist, Head of the Center for Applied History at MCC Budapest, scholar, and a terrific person. He’s forthright in his speech, incredibly well read and knowledgeable, thoughtful, open to criticism, and intellectually nimble.

Find my two previous conversations with him here and here.

As a change of pace, and frankly because he’d do a far better job, I’ve asked Ralph to write a guest essay for this Substack. Without further ado, here’s Ralph’s essay.

Ralph Schoellhammer

The liberal dream is dying, and it's taking the rules-based order with it. What we're witnessing isn't merely another crisis of capitalism or a temporary retreat from globalization, it is the fundamental reassertion of the political over the economic, of power over efficiency. The post-1991 interregnum is over, and we're returning to the natural state of international relations: zero-sum competition between great powers. As the global strategist Michael Every never gets tired of pointing out, in this new world it is not about how high your GDP is, but “what GDP is for.” In a recent article titled “Welcome to Bonnie Blue’s Britain,” the Economist argues that the new British economy should rely more on “cultural exports” (like pornographic content producers) instead of more traditional fields like manufacturing or heavy industry. This is quite the take, given the fact that a manufacturing and resource-based economy like the Russian economy is currently giving the West a run for their money in a proxy war in Ukraine. Maybe Russia has fewer Only-Fans models than Britain, but they produce more tanks, guns, and artillery shells – the thing that will matter the most in a world full of geopolitical competition.

Europe's Technological Surrender

The service-based economy was a luxury concept for a globalized world in which it did not matter whether your iPhone was designed in California and produced in China. In a world where China and the US are pitched against each other, design might still matter, but so does where it is manufactured. Europe provides the most instructive case study of what happens when a civilization chooses comfort over competition. According to the 2025 Belfer Center's Critical and Emerging Technologies Index, Europe consistently ranks third in artificial intelligence, biotechnology, and quantum technologies—a bronze medal performance that would be respectable if the competition weren't existential. In semiconductors and space technologies, Europe is not really competitive, commanding barely 10% of global chip production despite issuing EUR 43 billion in policy promises.

As I discussed in my conversation with Peter, this is not merely economic underperformance, it is civilizational capitulation. While Silicon Valley transforms algorithms into empire and Beijing weaponizes data into state power, Europe remains trapped in the fatal delusion that moral preening can substitute for material capability. The Americans innovate, the Chinese build, and the Europeans regulate. The result is as predictable as it is pathetic: a continent that speaks the language of digital sovereignty while practicing the politics of managed decline. Europe has chosen to referee a game it refuses to play, mistaking bureaucratic process for strategic vision. This is how civilizations die—not with conquest, but with committees. The core problem is not only financial but structural and ideological. Twenty-seven member states, each with their own industrial policies and startup cultures, lack the coherence of Washington's federal approach or Beijing's command economy. More fundamentally, Europe has convinced itself that moral superiority can substitute for material power, that GDPR can compete with industrial capacity.

The Strategic Patience of the East