Emerging from the fogs of politics and war, each continuing the other by different means, a historic global reset is now underway. On the surface, the world today is caught up directly or indirectly in the US-Israeli war on Iran, the Russia-Ukraine-NATO war, and their effects. Below the surface, as the reset’s contours become visible, they can help us to better grasp our own history and thereby better shape where we go from here.

Karl Marx’s Hegelian lens enabled him to see that how Britain subordinated India, North America, and the rest of its empire also provoked their modern development in ways that eventually undermined that empire. For example, the wars of independence waged by one colony created first the United States and then the Monroe Doctrine. Both diminished the British Empire and its aspirations. Yet the expanding United States also provided Britain with the slave-produced cotton that enabled the textile industry to underpin the British Empire’s nineteenth-century growth and power, with the United States also supplying Britain with its own markets and profitable investments.

As both Europe and Japan scrambled to expand and exploit their respective empires in the nineteenth and early twentieth centuries, it culminated in two world wars that destroyed them both. A partial exception was the United States, protected by two oceans and the limits of military technology at the time. The United States survived World War I (1914–18) with minimal damage compared to the other combatants. It did so again in World War II (1939–1945), using the required military buildup to recover from the Great Depression (1929–1939) while replacing earlier empires with its own. Many of the big contradictions driving world history since 1945 emerged from this rapid collapse of the old empires alongside the meteoric rise of the new American empire.

But America’s “informal” empire proved more productive and powerful than the “formal” empires of the past. It was united behind a single mission: to subordinate the rest of the world to serve its capitalists first and foremost. As Marx predicted, America’s rise produced a unified world economy by means of its technological innovations, especially in aviation and telecommunications. It thereby accumulated unprecedented levels of wealth.

It also defined for all the colonized people of the world a way forward. They would copy the colonizers’ technologies, diversify industrialized production, and participate profitably in world markets. Before 1945, the billions of people formally and informally colonized had been limited to the worst, most marginal positions in relation to global capitalism: suppliers of raw natural resources and cheap labor. Political independence, urgently pursued, disappointed those who imagined it would bring liberation from their colonial marginality.

Some of those billions tried to break out of their subordinate position by adapting the socialism of the Europeans. The working classes in Europe had looked forward to a world of “liberty, equality, and fraternity” as they supported the transition from feudalism to capitalism. But the result of that transition — actually existing capitalism — failed to deliver on those promises. Instead, socialism emerged as the answer. Marx proved crucial because his analysis of capitalism located the barrier to delivering on that promise inside capitalism itself, in its defining structure of the relations of production as employer and employee. Those workers who grasped what Marx taught tried to build an anti-colonialist movement that was also socialist: Kwame Nkrumah in Ghana, Ahmed Sékou Touré in Guinea, Fidel Castro in Cuba, Ho Chi Minh in Vietnam, Patrice Lumumba in the Congo, and so many others.

Their efforts, however deeply inspirational and influential on all that has happened since, proved nonetheless premature. Anti-imperialism was solidly grounded in a mass determination to end the marginality of the formerly colonized and now nominally “independent” regions. The support for socialism was less deeply rooted — present and growing but still relatively underdeveloped. What became the programmatic goal of the formerly colonized was to gain access, as quickly as possible, to the global capitalism led by the US empire after 1945.

After 1945, the US empire replaced European colonialism with an American brand of economic, political, and cultural domination. The United States grouped these now politically independent nations loosely into the United Nations, an institution that the United States controlled and funded. It subordinated them tightly in the North Atlantic Treaty Organization (NATO), the Southeast Asia Treaty Organization (SEATO), and comparable alliances around the world. The first twenty-five years after 1945 were a period of recovery for the war-ravaged economies of Western Europe and Japan. By providing Europe with money through initiatives like the Marshall Plan, postwar Western Europe bought what it needed to recover from American firms, thereby giving America’s own capitalists a Keynesian-stimulated prosperity.

That prosperity spawned a level of uncritical celebration of all things American as components of an “exceptional” society. But that exceptionality was temporary, a historical oddity shaped by two world wars’ extremely uneven effects. Instead, the United States’ self-celebration obscured history’s forward movement as it changed the nation and the world. When the American empire finally peaked early in the twenty-first century, few seemed to realize it. Fewer still noticed the beginning of its decline.

By the 1970s, the recoveries of the major economies destroyed by global war were largely completed. And with that, the first phase of postwar US prosperity came to a halt. The United States was no longer the only major manufacturer of the West, nor was it the only nuclear power. It did remain the globally dominant capitalist power, except where its dominion was rejected — the nations led by the Soviet Union and the People’s Republic of China. The US dollar had become the world’s number one currency, with the United States hosting the world’s number one consumer and capital markets. Along the way the United States had become a major world debtor. However, even as it introduced a new dollar vulnerability, it tied the rest of the world all the more closely to the dollar via the petrodollar system.

For US prosperity to continue, its employer class had to find a new way to profit in these changed global conditions. That class accomplished this by means of two major economic movements. The first was an exodus of manufacturing from the United States to China, India, Brazil, and elsewhere. China was best positioned, by the 1949 victory of its communist revolution, to welcome that exodus, which offered additional means to facilitate rapid industrialization. In effect, China offered employers outside the People’s Republic access to a massive new group of employees at far, far lower wages than anywhere else. After a few years, as the number of available employees swelled and their real wages rose, China sweetened the deal with their large and growing consumer market.

Under the control and supervision of a powerful central state and Communist Party apparatus, China constructed a two-sector economy. One half was private enterprises, owned and operated by both Chinese and foreign capitalists. The other half comprised public enterprises owned and operated by the Chinese government. In a very few decades, it very rapidly grew outputs of first consumer and then capital goods. By partnering with Walmart and other distributors, it quickly penetrated consumer markets nearly everywhere. Employers around the world could slow wage increases, since workers could now stretch their paychecks by accessing the cheap goods flowing from China.

The second major development enabling US prosperity after the 1970s was the so-called petrodollar system. Saudi Arabia, then the world’s major oil producer, and the United States both agreed to require all global oil sales to be priced in US dollars. This meant that every country who wanted to buy oil would need to maintain growing stocks of dollars to pay for it. Countries selling that oil would then accumulate huge dollar profits. Those stocks would be held and those profits would be invested in dollar-denominated assets, especially US Treasury securities, but also US private stocks and bonds, and US real estate. Dollars sent abroad to pay for all US imports (increasingly larger than exports) thus came back to the United States via the petrodollar system, in large part as loans to the US Treasury.

This is how the US Treasury was able to pay for its many wars, large and small, without having to raise taxes, and thus avoid provoking domestic opposition. As supplies grew, and oil became ever more important as an energy source, the pool of petrodollar funds expanded and thus fueled ever more US borrowing. It was a cycle that occasioned far less alarm than it should have.

What might happen, few asked, if oil supplies stopped for reasons natural or social? How would a closing of the Strait of Hormuz affect the petrodollar system that already faced other challenges? Would reduced global oil trade block or complicate budget borrowings by the US government trying to finance its trillion-dollar debts? Might US government borrowing under those circumstances force up interest rates just when a recession made that a particularly bad idea?

These are the contradictions of capitalism today, the effects of earlier configurations coming to a head. Capitalism once confined itself, in Europe for example, to small regions within a feudal context. It eventually grew, overthrew feudalism, and accomplished a transition to a new and different organization of production. At first these were individual and then clusters of enterprises, fields and workshops where employers and employees had replaced lords and serfs. Eventually individual capitalist workplaces grew and further organized themselves as national capitalisms. National capitalisms, intrinsically expansionary, provoked colonialisms and then, finally, a global capitalism. Its movements of goods, services, loans, and investments enhanced productivities, wealth, and power.

They also generated other sets of contradictions, including those that recently shut the Strait of Hormuz, caused the United Arab Emirates to leave the Organization of the Petroleum Exporting Countries (OPEC), increasingly displaced fossil-fuel based energy with solar technology, and built pipelines to reduce reliance on tankers. Then too, there is the shrinkage of political support for Donald Trump’s presidency as high oil prices serve, like AI, to worsen economic inequalities.

An economic revolution transformed European feudalism from an early small-scale, decentralized social system into a late feudalism structured around absolute monarchies and a thirst for colonies around the world. A comparable transition inside European capitalism transformed it from an early, decentralized social system into a late capitalism structured around globalizing megacorporations. The feudal and the capitalist periods, as well as the transitions among them, were characterized by some of the worst violence, genocides, and wars in the history of our species.

Today a similar whirlwind is growing in the Strait of Hormuz. Common to both feudalism and capitalism, and the transitions between and within them, was one constant: workplaces were structured antagonistically. In feudalism, serfs and lords confronted one another in constant struggle. In capitalism, employees and employers did the same. The revolt of the serfs from feudalism – around such goals as liberty, equality, and fraternity – ended up with a capitalism that instead replaced one antagonistic struggle with another. Perhaps the solution now is an altogether different kind of transition, one that breaks, finally, with all those antagonisms such as those between master and slave, lord and serf, and employer and employee.

The transition we may soon need is founded on a rejection of such antagonistic splits. Consider the possibility of a transition of workplaces — factories, offices, stores, farms, etc. — to democratically structured human relations. Suppose each person engaged in each workplace had one vote, with majorities deciding what to produce, how to produce it, and where the work activity occurred. What if democratic decisions likewise decided how to dispose of the products or, if located within market systems, the revenues from selling such products? Democratic decisions would decide on the distribution of income from the workplace.

Profit maximization in such workplaces would be only one among several goals. The contexts of local community, region, nation, and society would be welcomed to provide additional goals and measures. Workplaces organized under capitalism worked out their interdependence with their contexts to reproduce their employer-employee organization. Democratized workplaces would structure that interdependence differently, namely to reproduce their different workplace organization. The latter interdependence means that democratic decision-making could be far more socially prevalent than anything capitalism ever achieved.

Even where and when capitalism allowed democracy in the political realm based on residence, it denied it in the economic realm. Employees within capitalist workplaces had no vote on key enterprise decisions. Employers reserved those decisions to themselves exclusively. Employers’ interests governed their decisions. Where and when the employer-employee division is overcome, everyone working within a democratized enterprise helps to make a recognized contribution to running it. Every worker likewise shares an equal responsibility.

What needs to be done here and now is this other kind of transition. Democratically organized worker cooperatives are the goal. Such a transition honors the concept of democracy by adding the economic enterprise as a necessary site of its installation. To be clear, this transition would be global and apply to privately owned as well as state-owned enterprises. Capitalism built a world economy. The socialist transition proposed here can build a better one — an economy genuinely committed to delivering the liberty, equality, fraternity, and democracy that capitalism promised but never achieved.