Our Modern Interregnum (Pt. 2)

‘The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.’

—Antonio Gramsci

This is part two of my piece, Our Modern Interregnum. Click the link for the first section.

Today, we look at some of the symptoms of this breakdown and the intellectual frameworks of East versus West in this moment.

Because Globalisation was far more than just free trade. It was the ascendancy of Western capital as a source of power. But now things are reversing…

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The divergence between the monetary and physical economies is now stretched.

Seen through a vignette of incidents originally highlighted by Craig Tindale, these mini crises resist the West’s usual financial remedies.

In late 2025, a fire at the Novelis aluminium rolling mill in Oswego, New York, severed the link between Ford Motor Company’s financial capital and its physical output.

Ford’s credit lines remained open. Its stock continued to trade.

Its financial ledger was robust. Yet its assembly lines went silent. Engineers identified 2,455 components required to repair the mill.

They held 1,900 in stock. The remaining 555 were unavailable.

Those 555 parts represented the hard limit of American automotive sovereignty. No amount of Federal Reserve liquidity could manufacture them faster.

Around the same time, a catwalk collapse at BWC Terminals in Texas sheared a supply line and dumped 1 million gallons of sulfuric acid into the Houston Ship Channel.

Sulfuric acid is not a glamorous commodity. It does not feature in earnings calls or future-facing conferences. But it’s an essential reagent for processing copper, refining lithium, extracting uranium and treating nickel.

When domestic supply ruptured, the downstream chemical chain starved. Prior material supply chains, long atrophied, were not there to pick up the slack.

No amount of cash could fix the shortfall before supply lines halted.

These are not market fluctuations or black swan events. They are morbid symptoms.

The predictable, physically inevitable consequences of a system that spent forty years optimising the Financial Ledger while neglecting the Material Ledger.

These changes appear sudden only to those who refuse to measure them. And here is where our elites have failed us.

The Engineering State and
the Lawyerly Society

If the divergence between the two ledgers is the disease, what produced it?

Dan Wang’s Breakneck: China’s Quest to Engineer the Future provides the most compelling structural answer.

After spending seven years living in China as an analyst, Wang arrived at a deceptively simple thesis: China is an engineering state, and America (and the West by extension) is now a lawyerly society.

The engineers build. The lawyers block.

Over four decades, this difference has produced a chasm in physical capability that financial wealth cannot bridge.

The data is stark. China’s manufacturing base is projected to account for roughly 45% of global output by 2030.

Manufacturing accounts for 28% of Chinese GDP, compared with around 10% in the United States and the UK.

China has 58 operating nuclear reactors and 37 under construction. That’s more than the rest of the world combined.

Meanwhile, the United States’ only new reactor this century took over a decade to build and cost $35 billion.

China’s combined operating wind and solar capacity now exceeds 1.4 TW. 44% of the world’s total, more than the EU, US, and India combined.

These numbers are not the product of cheap labour. They are the product of what Wang calls ‘process knowledge’. The tacit, cumulative, hands-on expertise that accrues in factories, on construction sites, and across supply chains over years of sustained production.

Process knowledge cannot be written down in manuals, purchased with capital, or transmitted through licensing agreements. It is learned by doing. And it is lost by not doing.

This concept is the key that connects Wang’s ground-level observation to our current macro challenges in the West.

The irreducible unit of time required to build, repair, or replace physical capacity. To stand up tool makers and die shops. To train a new generation of skilled labour.

You cannot print a skilled metallurgist. You cannot legislate an engineering workforce into existence.

The West’s lawyerly society did not merely fail to build. It actively dismantled. Wall Street rewarded asset-light business models.

Corporations offshored not just labour but entire sector ecosystems.

The knowledge transfer was a one-way street, East.

Wang documents the result: as of 2024, 157 of Apple’s top 200 suppliers were still located in China.

China also pursued what Wang calls ‘completionism’, the deliberate maintenance of full-spectrum manufacturing capability, including in unprofitable sectors.

The Chinese state treats industrial capacity the way a military treats ammunition reserves: as a strategic asset whose value is measured in resilience, not quarterly returns.

Hegemony and the Sleep of Reason

Gramsci’s most enduring intellectual contribution was not the interregnum; it was his theory of cultural hegemony. The ruling class, he argued, maintains power not merely through coercion but through the manufacture of consent.

It achieves dominance by embedding its assumptions so deeply into culture, institutions, and intellectual life that they cease to be recognised as assumptions at all. They become common sense. They become invisible.

The dominance of the Financial Ledger over the Material Ledger is itself a form of hegemony.

For forty years, the entire intellectual apparatus of Western economics — the universities, the central banks, the financial press, the management consultancies, the credit rating agencies — reinforced a single core belief. That financial depth equals productive power.

GDP was treated as a measure of national capability. Market capitalisation was confused with strategic resilience. Liquidity was assumed to be convertible into matter on demand.

This hegemony was so complete that the system’s own decay registered as efficiency.

When a domestic chemical plant closed because Chinese imports were cheaper, the Financial Ledger recorded a gain: lower input costs, improved margins, and freed capital for share buybacks.

The Material Ledger recorded a loss: reduced capacity, degraded process knowledge, and increased dependency on a rival’s supply chain. But the Material Ledger was not consulted.

The hegemony of financial logic ensured that only one set of books was read. While quietly in the background, our system accrued a debt for its actions.

Wang captures this institutional blindness in workforce terms.

America’s elite talent pipeline funnels its most capable graduates into law, finance, and consulting. Professions that optimise, adjudicate, and extract, but do not produce.

Thus, the financialisation of Western structures continues.

However, those costs (and opportunities) for the West are now becoming clearer.

This is what my colleague Lachlann Tierney covers in his new investment thesis.

It’s called Pax Silica. Click here to view his latest presentation.

Tomorrow, I’ll cover concrete examples of this modern crisis and how the accumulated weight of a million rational decisions led the West down the path of globalisation.