Actually Existing Postliberalism

Twentieth-century civilization has collapsed. It rested on an essential tenet of liberalism: the state-society, public-private distinction. The state-society distinction reached its apogee in the mid-twentieth century, when the triumph and challenges of the postwar moment clarified the importance of defending social freedom from state power, while ensuring that the public realm was not taken over by private interests. Over the last few decades, this distinction has been eroded and finally abandoned altogether. Like it or not, the West is now postliberal.

This is not the same “postliberalism” that we are accustomed to hearing about. Postliberal thinkers from Patrick Deneen to Adrian Pabst have exposed the conceptual problems inherent in liberal theory. Liberals justify the separation of the public realm from the private sphere by appealing to value neutrality. This notion of separation involves a certain moral and metaphysical thinness. The commitment to neutrality is thought to prevent states’ coercing belief through law and force. It protects the private sphere, so that individuals and associations can live out their creeds. Yet by promoting civic neutrality, liberalism socializes us to moderate our ambitions for public life. Against this view, postliberal thinkers argue that the liberal state’s rejection of a substantive vision of the good hollows out politics and civil society. Liberalism produces a state bent on driving tradition and religion out of public life, an atomistic society in which money is the only universally acknowledged good. Postliberal intellectuals contend that if our ruling classes relinquished their liberal commitment to neutral institutions in favor of a substantive vision of the good, we could renew our civilization.

The Brexit referendum and Trump’s election in 2016 revealed the extent of the West’s malaise. Eight years ago, the postliberal critique seemed exciting and relevant, even as liberal intellectuals mounted impressive counterattacks. But these disputations have little to do with how we are actually governed. Governments long ago breached the barrier separating the public and private realms. Nor is the state the only danger, for the supposedly liberal institutions of civil society have given up on neutrality. Cancel culture is ­corporate and academic culture. The financial and tech giants pry into the private lives of ­citizens and punish them for their words and deeds. For quite some time, a substantive vision of the good has already been ruling over both state and society.

Leftist intellectuals were among the first to recognize the collapse of the old liberal separation between state and society. In their view, neoliberalism was to blame. Under Reagan and Thatcher, the private sector began to take over the public one; corporate power took control of the state, and economics captured politics. But this analysis gets ­reality backwards. The state has not been suborned by economic interests. Rather, political interests have come wholly to dominate economic and financial interests, fusing state and society together.

The triumph of the political is most evident in the way today’s debates about liberalism proceed. They are invariably concerned about connecting liberalism to international politics, the postwar liberal international order. To save liberalism, centrist stalwarts call for America to defend the “rules-based” order set up after World War II. It’s a familiar story: In the aftermath of the war, international institutions such as the World Bank and the International Monetary Fund were commissioned to establish the bases for an impartial system of economic competition. But because of communism, postwar liberalism had a limited reach. The fall of the Eastern bloc changed that. The end of the Soviet empire vindicated liberalism, and after 1989, liberal institutions could truly become international. Neutral, procedural mechanisms would coordinate divergent interests on a global scale. Now, however, Russia’s military aggression and China’s ascendancy are straining this globalized system. Populists undermine it at home. So laments the narrative.

Faced with recent events, liberal intellectuals allow that they were too optimistic about the prospects for global cooperation after 1989 and may have oversold the benefits of economic freedom. Many concede that the critics of neoliberalism are right, at least in part. Yet questioning the economic decisions of the past thirty years does nothing to undermine the mythology of a continuous postwar liberal international order. Accepting the neoliberal critique allows the stalwarts of the center to shield geopolitical ­decisions—­often their own decisions—from deeper criticism. Their modified narrative—­mistakes were made in implementing a universally acknowledged global good—conceals the fact that the liberal principles that centrist intellectuals urge us to defend had already been abandoned in the international realm.

The international situation tells the tale of postwar liberalism’s breakdown most clearly. Neutral institutions, particularly financial ones, have been weaponized to serve political ends. In this realm, the erosion of the distinction between state and society has been quiet and subtle, yet startlingly effective. The political transformation of world finance has driven domestic upheavals and reordered the way we are governed. It is the engine of the West’s great transformation from liberal modernity to something new—to actually existing postliberalism.

The first sign that we don’t live in the old postwar liberal international order is that the economic system underwriting it has long ceased to exist. In August 1971, Richard ­Nixon decided to suspend the convertibility of the dollar to gold. The change shattered the economic system established at Bretton Woods during the final stages of World War II. Nixon’s decision initially shocked the global financial system, but it laid the foundation for American financial ascendancy. The dollar replaced gold as the backstop of global finance. Thus, as the United States entered the first stages of de-industrialization in the 1980s, American economic and political power did not decline, as experts anticipated. Nor did anyone really comprehend the tremendous political advantages implicit in the transition from a gold standard to a global economy based on America’s fiat currency. The American political classes were, at least at that time, only dimly aware of their own capabilities. They were focused on other objectives.

On July 3, 1989, months before the fall of the Berlin Wall, the Wall Street Journal affirmed its commitment to the following constitutional amendment: “there shall be open borders.” The surprise events of the following November provided the opportunity to implement this vision of a truly global economy committed to the free movement of goods, capital, and labor. But just as the Wall Street Journal editorial had opined that more minorities were needed to help Americans “acquire a renewed view of our own difficult past,” so openness meant advancing the spirit of anti-discrimination further than ever before. This imperative set the transatlantic tone for the next few years. In 1990, Congress raised immigration to unprecedented levels to boost economic growth. It also abolished much of the English-language testing for naturalization and made it easier for homosexuals to immigrate to the United States. That same year, the Schengen Convention proposed the abolition of all border controls within Europe. In 1991, Congress passed new civil rights legislation that cemented in place the doctrine of disparate impact. To abolish discrimination on the basis of sex, the European Court of Justice overturned national laws that prohibited businesses from assigning women nighttime shift work. Open borders, free trade, and the open society: It seemed that neoliberalism’s triumph was complete.

From the vantage point of the 1990s, it looked like the Americans and Europeans were using the opportunity presented by the collapse of the Soviet Empire to construct a genuinely liberal global system. Economic affairs would be liberated from statist, political competition, the crude power contests of the past.

Utopianism of that sort may have animated commentators such as Thomas Friedman, and it’s still the way the stalwarts of the center recall the moment’s aspirations. But this account downplays the political and economic anxieties of the period. 1989 had set off a discreet but decisive geopolitical contest within the West. The Europeans were using the opportunity of 1989 to take continental integration to unprecedented levels, laying the groundwork for the Euro. Led by the French, they dreamed of building a new continental powerhouse that could challenge the United States. German unification was set to be the cornerstone of a single sovereign Europe. Yet George H. W. Bush made American support for German unification conditional on the French and West Germans’ preserving NATO and expanding it into East Germany. It was a cunning move. By keeping NATO alive, Bush forestalled European geopolitical independence. As the Cold War ended, the rationale for military and economic dependence on the United States receded. Yet the first Bush administration engineered events so that American political and economic power over the rest of the West became greater than ever before.

After 1989, the United States enjoyed supreme military power. In the coming years, it would occasionally attempt to exert its influence through these means. These efforts bore mixed results. Bush Sr. would preside over the swift success of the 1991 Gulf War; he would ­also set in motion the events that led to the disaster of Mogadishu in 1993. Yet military misadventures did little to alter America’s role as global hegemon. American financial power became the true engine of dominion. The United States took charge of the globalized economy and turned it into a powerful weapon.

When Bill Clinton took office, he continued the pursuit of openness. In 1993, he ratified NAFTA and relaxed the ban on homosexuals in the military. However, he made it clear that the old liberalism was not enough. Eager to extend the reach of democracy and confront foreign enemies who stood in its way, his administration developed new tools to advance America’s global power. In September, National Security Advisor Anthony Lake outlined a new paradigm. His speech, “From Containment to Enlargement,” bespeaks a political revolution. It provided the blueprint not only for the foreign policy agenda of nearly every U.S. president since then, but for the convictions of every right-thinking person. Lake’s speechwriter was Anthony Blinken.

Lake began by denouncing neo-isolationism on the left and right. Its source, he asserted, lies in misguided economic anxiety. The speech contained the usual promises that global free trade would bring prosperity for all. But the economic benefit to American citizens was an afterthought. The speech focused on America’s new global political program. With the elimination of the “big, red blob” of communism, the United States would focus on expanding the world’s “blue areas” of market democracies—on regime change.

Yet the policy of enlargement was not just about using American military might to expand liberal democracy. Enlargement, Lake argued, had a second meaning. It was about developing and enhancing state-society partnerships. The Clintonians were learning from domestic politics. In that sphere, they were launching a revolution from “government” to “governance,” what Christopher Caldwell describes as the “great innovation of the Clinton administration.”

Borrowing from management theory, the Clintonians wanted government to expand to involve social actors. These actors were not held to the same rules of conduct as state actors were, and therefore could act much more effectively. By leaning on social actors, leaders could bypass state actors responsible to the electorate and could get good results. Domestic lessons set the precedent; after all, the civil rights revolution was conducted as a state-­society project. Court decisions had established the significant liabilities facing private organizations should they fail to be vigilant agents of anti-­discrimination. And private organizations learned to become very effective agents of this new political project. They had their vision of justice and wanted to achieve it. It was too important to leave that task to slow-moving governments. By the early nineties, there were now legions of NGOs, corporations, philanthropic associations, academics, entrepreneurs, journalists, and bureaucrats who expected to have a say in politics. They did not see themselves as bound by national loyalties, restricted by certain borders, or subject to rigid accountability structures. In the new era of “governance,” this dispersion of control was something to celebrate. It’s no surprise that Lake’s speech targeted “centralized power” as the enemy hindering the spread of the “blue” hue. Globalization’s interpreters, wedded to narratives about the obsolescence or privatization of the state, passed over the true significance of these changes. What was really happening was the deformation of the state.

The Clinton administration saw that achieving their foreign policy revolution would require looking beyond the state, just as the civil rights revolution had done at home. “We should pursue our goals through an enlarged circle not only of government officials but also of private and non-­governmental groups,” Lake argued, naming a range of social actors, from “private firms” to “­human rights groups.”

The Clintonians were offering the first theory of global management directed to geopolitical and moral objectives: a substantive vision of the good. State and social actors would be coordinated to fight the “intolerant energies of racism” abroad. They would confront what Lake called “backlash states,” isolating them “diplomatically, militarily, economically, and technologically.” Although he didn’t go into detail, Lake also portrayed America’s “financial” resources as “national security resources.”

Those resources were quickly put into action. As Clinton adviser James Steinberg said, “We succeeded in something that had been tried ­ever since the early seventies, which was bringing the economics into the heart of national ­security decision-­making.” Over the next few decades, the Clintonians and their successors would devise increasingly ingenious ways to put economics at the service of politics. They used America’s financial super-eminence to project political power abroad, imposing American aims without risking ­American lives.

The critics of neoliberalism recall the nineties as a time of idealistic, even naive commitment to economic cooperation. That criticism describes the peculiar American submissiveness toward China, but not much else. By the end of 1994, the Clinton administration had decided that Russia must be treated as a political competitor. “Neo-containment” was not mentioned publicly, but it was mentioned privately. Capitalizing on Moscow’s economic weakness, the Americans used their financial power to achieve their vision of enlargement; in this case, the NATO expansion that Mikhail Gorbachev had been assured in 1990 would not happen. “I think Russia can be bought off,” Clinton told Dutch prime minister Willem Kok in 1995. Under Clinton, the ­United States became Russia’s largest foreign investor. Ostensibly neutral international economic institutions were brazenly altered to serve American strategic ends. Seeing Boris Yeltsin as more moderate than the alternatives and fearing he might lose the 1996 election, the Clinton administration persuaded the IMF to give him a $10.2 billion loan, with few of the usual conditions. Yeltsin spent his way to victory.

These measures employed the carrots that American financial hegemony made possible. The sticks were even more inventive. When Yugoslavia fell apart in 1992, ethnic cleansing began, and the Serbians became the chief international pariah. In his last year in office, Bush Sr. had implemented several rounds of state-based sanctions. Clinton changed the paradigm, employing a public-private partnership that would become the norm. In April 1993 the U.S. began its first experiment with “smart sanctions.” The Clinton administration pioneered the move away from targeting states to targeting the individuals who governed the states, hitting their economic and social networks. Sanctions were imposed on Slobodan Milosevic and his entourage, freezing them out of the dollar-based international economy—effectively “unpersoning” them as economic agents. The objective was not just to try to change Milosevic’s behavior or signal moral disapproval of his actions, but also to undermine his popular support and his position as head of government. Smart sanctions looked like regime change on the cheap, changing the leadership of a national government without sponsoring bloody military operations.

The use of “smart sanctions” set a powerful precedent. Targeting individuals and their supporting institutions created new opportunities and fresh justifications for American policymakers to project influence around the world. As these uses of American financial power expanded, however, the liberal foundations of twentieth-century civilization crumbled.

Defenders of the old paradigm intuited that the new state-society partnerships could undermine the neutral reputation of America’s global economic leadership. Because of the dollarization of global finance, the credibility of the global financial system depended on international confidence in the impartiality of the United States Treasury. In the face of pressures from the American foreign-policy and security bureaucracy to act otherwise, Treasury bureaucrats tried to adhere to the liberal principle of state neutrality with respect to economic affairs. In the 1990s, the US intelligence community wanted Treasury to use its knowledge of the financial system to help disrupt the bank accounts of a terrorist organization then operating through Sudan. Treasury said no: The risk to America’s liberal credibility would be too great. The terrorist organization was al-Qaeda.

When George W. Bush entered office in 2001, he did so as a liberal. His signature initiative was supposed to be implementing capital and labor mobility across the whole continent. The summer 2001 Summit of the Americas drafted plans for expanding NAFTA, launching a “Free Trade Area of the Americas (FTAA)” by 2005.

Bush may have dreamt of spreading liberalism more broadly than his father did. But his legacy is the opposite. Under his administration, the ­United States overturned the liberal financial system of impartial rules free of political manipulation. The apolitical neutrality of global finance slipped away. Financiers became willing instruments of U.S. foreign policy, reorienting themselves and their institutions to serve increasingly bellicose political objectives.

Globalization’s theorists often paint a picture of a global village, a decentralized community of relative equals. But globalization was always much more centralized and asymmetrical. Globalization is better understood as a hub-and-spokes arrangement, where emerging markets depend on established “hubs” to connect them to other markets. Because almost all transactions must pass through these hubs, they require the hubs’ approval. This is particularly true with respect to international finance. New York serves as the world’s most important financial hub, not just because of the size of its capital markets, but more importantly because the dominance of the U.S. dollar as the world’s reserve currency, making access to the American financial system critical. The essential role of American financial institutions in the weal and woe of very nearly every major economic actor in the world confers on the United States government a vast power. Previous officials at the Department of Treasury grasped that power, but they shunned it in the name of liberalism. Under Bush, that would change.

Building on the Clintonian experiments in smart sanctions, some innovative officials working in Treasury agreed that traditional state-to-state policy coordination was inadequate to achieve the desired results. They discerned that private institutions, especially money-center banks, which financed and processed commercial interactions, could achieve the ends of state policy far more effectively than the traditional tools of statecraft. If private sector financial institutions cooperated with U.S. government agencies, great results could be achieved.

After September 11, 2001, the innovators were provided with a unique opportunity to put their proposals into action. To strike back at al-Qaeda, they banished the old liberal mentality and its hesitations about weaponizing the private economy. One of the innovators, Juan Zarate, said: “We realized that private-sector ­actors—most importantly, the banks—could drive the isolation of rogue entities more effectively than governments—based principally on their own interests and desires to avoid unnecessary business and reputational risk.” State actors started this process, but private actors did the essential work. “When governments appear to be isolating rogue financial actors, the banks will fall into line . . . Our campaigns leveraged the power of this kind of reputational risk.”

On September 23, two weeks after the attacks, Bush signed Executive Order 13224. “We’re putting banks and financial institutions around the world on notice,” he declared. “If you do business with terrorists, if you support or sponsor them, you will not do business with the United States of ­America.” The emergency executive order was broad. It enabled the targeting of financial supporters of terrorism, terrorist-owned companies or businesses, and those “associated” with them. Any bank that permitted dubious accounts or transactions to go through it risked having its American assets frozen by the U.S. government. In effect, it would be expelled from the U.S.-based international system, destroying its reputation as a trustworthy financial institution. The order created an atmosphere of ­liability for global financial institutions, just as civil rights laws had done for domestic corporations. A failure to be vigilant brought penalties. The purpose was to encourage banks to be proactive about assessing the risks associated with certain clients. The government was deputizing key players in the private economy to become its enforcers.

As its advocates anticipated, this approach to choking off funding for terrorist organizations was transformative. No bank wanted to get cut off from the U.S. banking system. Moreover, the Bush administration provided a legal framework that invigorated nongovernmental entities to target banks deemed insufficiently proactive. Banks were closely scrutinized for breaches of sanctions.

The Treasury also turned its attention to inducing international institutions to fight terrorist financing. Early on, the G7, IMF, and World Bank were brought into the sanctions regime. These measures, however, did not go far enough. To cripple al-Qaeda’s finances, the U.S. government needed information about bank-to-bank transfers. But this information is held in the databases of a private, obscure organization that serves as the switchboard for most of the world’s financial system: the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

The U.S. had tried to get information from SWIFT in the past. Under Bush Sr., a team led by Robert Mueller tried to subpoena SWIFT’s messaging system. But they had no legal authority to do so. In accord with liberal principles, communications among market actors enjoy a presumptive right of privacy. The action produced no results. After 9/11, Treasury took a different approach. It simply asked SWIFT to cooperate and provide the U.S. government with access to its transactions. SWIFT’s CEO demurred. He stressed the organization’s need to remain apolitical and neutral. The system’s ­European clientele were particularly sensitive to invasions of privacy. But SWIFT and the U.S. government developed a workaround. In public SWIFT would proclaim its neutrality. In private it would collaborate, developing a clandestine program for sharing financial information with U.S. officials. To keep SWIFT on board, government officials had to concede to the organization a significant and ongoing role in the design and implementation of the program of monitoring all global transactions. This meant providing SWIFT with classified information about terrorist suspects and their supporting organizations. The public-private partnership became profound.

The Patriot Act provided the Treasury with another powerful tool. Section 311 gives the Treasury secretary the power to label an institution risky in view of suspected money-laundering. The vagueness was ideal for targeting financial institutions. The U.S. government did not need to freeze assets directly, something difficult to do when money-­laundering is only suspected, not proved. Private banks, by contrast, are not legally constrained in this way. They are free to cease doing business with whomever they choose. Section 311 provided a powerful incentive for banks to do exactly as the Treasury recommends, to offload any entity deemed an institutional risk.

New state-society partnerships, erected on a scaffold of post–9/11 legislation, executive orders, and secret SWIFT cooperation, enabled policy-makers in government to wage the wars that American soldiers couldn’t. Beginning in 2003, after the Bush administration had turned its attention to rogue regimes and had boots on the ground in Afghanistan and Iraq, the Treasury went much further. In the following years, banks in Syria, Belarus, Burma, and Ukraine would all be hit with the new publicly mandated, privately imposed sanctions. In 2005, a Section-311 action against a small bank in Macau that did business with North Korea, Banco Delta Asia (BDA), turned the institution into a financial pariah. By July 2006, even the Bank of China, concerned to protect its reputation, froze North Korean accounts related to BDA. The final years of the Bush administration saw similar tactics deployed against Iran. The U.S. cut dollarized transactions for Iranian oil out of New York; the European Union followed with similar actions designed for European banks.

In just a few years, the Treasury had moved beyond targeting terrorist suspects to going after financial institutions associated with national governments deemed enemies, to hitting the financial institutions of targeted governments themselves. The Bush administration marked the definitive end of the old liberal financial paradigm. The private sphere would never be the same. The tradition of bank secrecy has been a quiet but obvious casualty. Banks have changed the way they understand risk. Before, banks had given priority to client privacy. A bank that divulged information about its clients was deemed too risky to work with. How can you thrive in the marketplace when your competitors know all about your financial affairs? Now, banks were eager to expose their clients to scrutiny, at first only secretly in accord with demands by government officials, but soon also those of politically engaged organizations. This explains why “environmental, social, and governance” (ESG) norms, or “socially responsible investing,” took off during the Bush years. The major banks that helped launch ESG described it as risk management, with risk now defined in political terms: national security, environmental responsibility, and social justice. By encouraging companies to expand their definition of risk, the Treasury accelerated these trends. Compliance with the law was not enough; the objective was to create and expand a new notion of good corporate citizenship. Incentives and liabilities were put in place to encourage the market itself to enforce the new consensus on what risk meant. Private actors might occasionally resist the politicization of economic life, but most often they accepted the new terms and promoted them as “good for business.”

The direction of financial means toward political ends could be accomplished only with the ­cooperation of banks and other private entities. Private actors in civil society did not oppose this cooperation. Rather than check the power of the state, as liberal theorists stipulate, the private sphere of global finance collaborated with the state. Far from limiting the state, private economic actors have enhanced its powers and extended its reach, all the while changing their own understanding of their mission, the requirements of corporate citizenship, and the contours of citizenship itself.

Barack Obama took the new paradigm further. When he made gay rights a cornerstone of American foreign policy, the strategy to ensure their spread relied on state-society partnerships. Hillary Clinton’s signature 2011 speech on gay rights promised to “support the work of civil society organizations working on these issues around the world.” Breaking from prior U.S. practice, these organizations could conceal the source of their funds, hiding their connection to the U.S. government in order to pretend that gay rights was a grassroots movement.

Contrary to his hawkish critics, Obama wasn’t fixed only on “soft power.” In 2011, American conservatives were mocking Obama for “leading from behind” in the Libyan campaign, criticizing his reluctance to use American troops. This criticism was myopic. His administration was setting aggressive new precedents. Using the state-society partnership the Treasury had pioneered, the U.S. froze $37 billion of Libyan assets—at the time, the largest sequestration of assets in history. It marked the first time these financial sanctions had been used with the explicit intention of toppling a government. In January 2012, the Obama administration decided to strangle Iran. It invoked Section 311 against the country’s entire banking sector, including its central bank. This was the first time the measure had been used against another country’s central bank. Soon after, SWIFT crossed a rubicon from neutrality to partisanship in international relations. It sanctioned an entire country, expelling Iranian banks from its system. The Obama administration pivoted to negotiate with Iran about its nuclear program, and the Iranians, under intense financial pressure, were willing to talk.

These years were the high point of sanctions diplomacy. It was far less visible and militaristic than the British Empire’s gunboat diplomacy, but it seemed just as effective. At one administration holiday party in 2011, the director of Treasury’s Office of Foreign Assets Control sang “Every little thing we do is sanctions,” to the tune of The Police’s “Every little thing she does is magic.” The approach seemed invincible. With an array of state-society partnerships, the United States could get whatever it wanted.

In 2014, Russia annexed Crimea. Stunned, the U.S. leveled up its sanction regime, striking for the first time at a great power. The scale of what was required demanded close cooperation among U.S. agencies and across the European and American financial sectors. It was, to say the least, a messy moment. The Obama administration itself hesitated, troubled by the old liberal voice of conscience. Toward the end of his term, Treasury Secretary Jacob Lew worried that the American politicization of the global financial system might turn more countries against it. Moreover, it was ­unclear whether sanctions were as effective as their enthusiasts thought. Though Russia’s economy weakened, this development probably had more to do with to the decline in oil prices. Russia certainly did not withdraw from Crimea.

From his use of tariffs to individual sanctions on International Criminal Court prosecutors ­going after American soldiers, Donald Trump’s foreign policy generated apoplectic commentary: He was destroying the liberal international order! Yet Trump did not invent these tools. His innovations were to use them extensively against China and bring the tools to bear as part of hard-edged diplomatic bargaining. Along the way, his administration was ready to treat hostile legal activists like corrupt oligarchs. That’s why more sophisticated critics of Trump didn’t reject the tools. They planned to use them better than he did.

After Biden was sworn in as president, his administration shelved a plan to overhaul sanctions policy. A consensus held that if the kinks of the past could be worked out, then the Americans and Europeans had all the weapons in place to launch a devastating financial first strike against their preferred targets. Planning began in the first year of the new administration, with Secretary Blinken’s State Department taking the lead. So by February 2022, just as the Russian invasion of Ukraine faltered, the arrangements were already in place. The strategic possibilities seemed limitless. Russia could be brought to its knees; Putin would follow in the ignominious footsteps of ­Milosevic and Gaddafi.

The execution of the strike was dazzling. The scale, especially the involvement of SWIFT and the targeting of Russia’s central bank, caught the Kremlin by surprise. It was ­Barbarossa for the twenty-­first century. Yet the first strike did not yield the promised results. Nor did the second, third, or fourth. Putin’s approval ratings soared, Russia’s industrial output increased, and its military continues to grind away at the Ukrainian army. Despite implementing nearly 6,000 sanctions in two-plus years, the euphoria of spring 2022 (let alone that of the holiday parties of 2011) is long gone. Although American policymakers have said again and again that they have mobilized a global coalition against Russia that has left the country isolated, that is not the case. The map of the countries that have imposed sanctions on Russia closely resembles the map of the countries that have legalized same-sex marriage. Economic warfare against Russia has exposed the limits of the global American empire.

Washington’s “geoeconomic,” sanctions-­driven strategy of “enlargement” failed, and the deep state knows it. In July, the Washington Post quoted a ­variety of active and former government officials who now criticize the excessive dependence on sanctions, including Obama’s deputy national security advisor Ben Rhodes. The Post also revealed that the state–society partnership is faltering. The business world has overwhelmed the federal bureaucracy with inquiries about how to implement sanctions and against whom. Corporations are thus forced to make many national security–­related decisions themselves. And the crisis is not just operational. American officials now realize that no reasonable observer believes the American-­led global financial system is still neutral. As a consequence, many countries are building alternatives. In the long run, the rise of alternative financial markets and intermediaries threatens the dollar’s status as a reserve currency and thus the financial foundation of American power.

Does the failure of sanctions against Russia mean a return to the old liberal tradition of public-private separation? Evidence suggests that the answer is “no.” Rhodes sees the foreign-policy problem, but he doesn’t grasp the effects of these changes in the domestic realm. The fusion of political power with economic power seems likely to increase, and as the political friend-enemy lines get redrawn, the application will become more ruthless. In his speech for the twentieth anniversary of 9/11, George W. Bush declared:

We have seen growing evidence that the dangers to our country can come not only across borders, but from violence that gathers within. There is little cultural overlap between violent extremists abroad and violent extremists at home. But in their disdain for pluralism, in their disregard for human life, in their determination to defile national symbols, they are children of the same foul spirit. And it is our continuing duty to confront them.

Whether the enemy is abroad or at home, whether they are al-Qaeda terrorists or domestic rioters, they are essentially the same, and must be confronted with the same security tools.

In February 2022, just before Russian tanks rolled into Ukraine, the Canadian government deployed the financial weapons of war against its own citizens. Canadians who had donated to the Truckers Convoy found themselves barred from accessing their bank accounts and savings. At least 76 bank accounts were frozen, assets totaling 3.2 million CAD. Many were aghast and placed the blame for “de-banking” on Canadian prime minister ­Justin Trudeau—guilty of a dictatorial misuse of the state of emergency, just like his father. But that is obsolete thinking. The measures the ­Canadian state invoked were successfully employed because they enjoyed the enthusiastic ­cooperation of Canadian banks. State and corporate goals had been fused together long before the 2022 Truckers Convoy. Like 9/11, Covid was an opportunity. It enabled states to perfect policies that they were experimenting with and which corporations were encouraging.

Actually existing postliberalism may have advanced furthest in Canada. Yet de-banking has become more and more common in the West. Tactics once employed against al-Qaeda are used against citizens deemed “children of the same foul spirit.” In 2022, the National Committee for Religious Freedom (NCRF) had its account with JP Morgan Chase closed. Chase said it might consider reopening it if NCRF divulged some of its donors’ names. Although Chase changed its story several times, the bank insists that it is complying with federal regulations on money laundering and terrorism. ­Fidelity Charitable has brought to bear similar pressures to break donor anonymity at the Alliance Defending Freedom. In June 2023, the UK bank Coutts and Co. suddenly closed Nigel Farage’s account. This decision was later exposed as politically motivated, as an internal dossier had concluded that Farage was “xenophobic and pandering to racists.” In the investigation that followed the scandal, the Financial Conduct Authority reports that UK banks are closing almost 1,000 accounts every day, a massive increase over prior years.

After the Farage de-banking scandal, British leftists observed that free speech isn’t the main issue; account closures disproportionately affect British Muslims. They have a point. De-banking is not new in Britain. It took off in 2014, when HSBC started shutting the accounts of well-known British Muslims without providing a reason. Just over a year before, in a deferred prosecution agreement with the U.S. government, HSBC had accepted internal monitoring to help the bank comply with money laundering and sanction laws.

Widely accepted changes in the domestic legal and financial order have banished liberal norms. As part of ever-­tightening anti-terrorist laws, governments require banks to monitor potential terrorist financing themselves. For banks, de-banking—the euphemism is “de-risking”—is necessary for responsible risk management and regulatory compliance, given present realities. Whether one strikes at conservatives, Muslims, those with ties to Brexit, or those with Russian names, there’s a pattern. Just as civil rights law allows corporations to enforce DEI ideology across the whole business world, so anti-terrorism law allows corporations to enforce political loyalty tests across the whole financial system. We are seeing in domestic life what has been happening at the global level since the 1990s. Civil society, especially its economic dimension, is being weaponized. Those who threaten the regime, or who give even the appearance of being the sort of person who might pose a threat, are at risk of being made non-persons.

As with so much in the era of actually existing postliberalism, the frankest description of its vision comes from Tony Blair. In 2006, then prime minister Blair said that the “traditional civil liberty arguments are not so much wrong, as just made for another age.” Soon after, his home secretary John Reid elaborated. The previous age—the postwar age—began in response to concerns about the threat the “fascist state” posed to individuals, Reid said. Today, the threat comes from “fascist individuals,” not fascist states. This new threat—that of bad actors among us—calls for a new state-society arrangement. “Effective security,” Reid argued, “now relies on the participation of a much wider range of ­actors—from governments and public bodies, to companies and people . . . networks of public and private organizations have a joint role in guaranteeing local, national and international security.” In short, liberalism was a product of the postwar moment. Its time has ended. After the conclusion of the Cold War, British elites traded on the glories of the postwar moment to purify the British people, removing the stains of xenophobia, ­Euroskepticism, and racism. But when pressed, these elites thought the postwar era offered little of lasting significance beyond antifascism. Indeed, according to the new Blairite standards, more enlightened Brits might come to conclude that the whole postwar era seemed like a rather dangerous time. How many fascist individuals had been walking about then? How much fan mail had Enoch Powell received? One shudders at the prospect. Better to trust Blair and his successors, all the way down to Keir Starmer, to lead us into a safer, purer age.

Some revolutionary epochs are beset by the illusion of change. As Alexis de Tocqueville saw, the architects of the French Revolution—the 1789ers—relied on the powerful tool of a centralized state and the freedom of action made possible by a hollowed-out civil society, both created by the old regime. By contrast, the epoch of actually existing postliberalism is beset by the illusion of continuity. Its architects—the 1989ers—came into positions of power and influence just as the Cold War was ending. They knew very little of the war itself and almost nothing of its beginning. But they justified their ambitious geopolitical projects by tracing a long line of continuity back through the Cold War to the Second World War. The West’s victories over communism, fascism, and racism could be stretched further and further afield, isolating and destroying “backward states” and “rogue actors.” On these terms, the ’89ers imagined that they were the next generation of defenders of a continuous liberal tradition. But their actions indicate otherwise. Their substantive vision of the good didn’t just run up against hard limits in the last few years. It devoured liberalism. The ’89ers reconfigured the whole international system away from the liberal principles they ostensibly cherished. In due course, the domestic sphere has been bent to this new order.

The central drama of the last three decades has been the fusion of state and society. The ’89ers ushered in actually existing postliberalism, a society in which governmental power, cultural power, and economic power are coordinated to buttress regime security and punish the impure. 1989 heralded not the triumph of liberalism but its downfall. However, many refuse to recognize—or cannot recognize—how profoundly the West has changed. Our task is to live in the world into which we are thrown, to see it accurately, and to push it in a better direction.

Nathan Pinkoski is research fellow at the Institute for Philosophy, Technology, and Politics.

Image by Karl von Pilotoy, public domain. Image cropped.