State Aphasia No More

REVIEW ESSAY
Marketcrafters: The 100-Year Struggle to Shape the American Economy
by Chris Hughes
Simon & Schuster, 2025, 480 pages

“Face blindness,” or prosopagnosia, is a condition in which a person cannot recognize human faces, at times not even their own face in a mirror. Something similar afflicted most of American academia and journalism for almost two generations during which the absolute centrality of the state to the performance of capitalism became almost impossible to see. Call this “state aphasia” or “state blindness.” Much like people with face blindness attempting to recognize individuals by their clothing, or by their distinctive gestures, policymakers across the political spectrum were reduced to trying to make sense of circumstantial clues, unable to see the massive economic role of government in the American political economy.

Under this neoliberal dispensation, the United States seemed to be governed by paradoxes. For instance, the “national interest” within the interstate system was rarely discussed or appreciated, even as it was often invoked in rhetoric. Drunk on neoclassical economic theories of free trade and market integration, America exported most of its industrial and technological capacity to China, even as official military doctrine recognized the PRC as a potential adversary. This happened because matters of state had fundamentally evaporated from intellectual discussion.

With globalization no longer tenable, the American elite is just now beginning to emerge from its condition of state aphasia, and the terms of expert discourse are accordingly recoalescing into a post-neoliberal dispensation, though its shape is still to be determined.

New ideas on political economy are coming to the fore that would have been heretical a decade ago. But there is a reading of capitalism that has yet to be fully articulated, which places the state at the heart of the story.¹ As the late sociologist Charles Tilly noted, “States have been the world’s largest and most powerful organizations for more than five thousand years.”² And a huge part of what they do is economic management: taxing, extracting, and spending for social provisions, infrastructure investment, basic research, and the waging of war, among other things.

The modern state is, in fact, central to the metabolism of modern capitalism; indeed, the modern bureaucratic state and the capitalist private sector emerged symbiotically out of the power struggles of Renaissance Europe. In the face of a rising China, this old public-private symbiosis is once again undeniably evident, even in the United States, as successive administrations scramble to assemble a coherent industrial policy in which Washington sets the strategic direction for sectors and firms.

Into this moment of rediscovering the state’s indispensability comes Marketcrafters: The 100-Year Struggle to Shape the American Economy by Chris Hughes, cofounder of Facebook turned economist and critic of Facebook.³ In Marketcrafters, Hughes reads government as central to the evolution of American capitalism, and he tells this story by sketching the biographies of what he calls “marketcrafters,” policymakers who have used state power to craft markets for specific social and political ends. As his book shows, both liberal Democrats and conservative Republicans have employed marketcraft.

Clearly written, well researched, and covering some extremely important history, the book nonetheless has serious limitations. The main one being its methodological individualism that results in large part from structuring the narrative as a series of career biographies. This casts causality as residing in personalities. While this might be intended to make the book more readable and the history more relatable, the price paid is that larger structural dynamics remain obscured. This structure also fragments economic history into a collection of snapshots; this is particularly true in the latter portions of the book.

At the outset, we get long and thoughtful chapters on the profound economic restructuring of the Depression and war years. By the end, we arrive at a series of increasingly hollow sketches of Ivy League–educated power cliques; it is at this point that the logic of social media starts to haunt the text. Perhaps unintentionally, these limitations illustrate the decline of our political class, from a pantheon of political giants who once saved capitalism and forged the middle class to a network of high-flying technocrats, who, unlike their forebears, increasingly have no mooring in any real-world popular constituencies.

New Deal as Marketcraft

The book begins with the New Deal. While the struggle to shape the American economy goes back to the revolution and the early republic, Hughes settles on only the last one hundred years because, one supposes, that world is fundamentally recognizable to us. The Second Industrial Revolution has occurred; automobiles are on the street; electrification is in full swing; the Federal Reserve exists; Wall Street and the financial markets are large, complex, and relatively internationalized.

Hughes’s narrative path through the decades of the New Deal and World War II runs through the Reconstruction Finance Corporation (RFC); he focuses on its workings under Jesse H. Jones, the self-made Texan millionaire who ran it for FDR. Established in 1932 during the waning days of the Hoover administration, the RFC under Jones grew into something like a giant national development bank crossed with an economic planning agency. Its effects on the recovering American economy were profound. Yet, amazingly, in the beginning of Roosevelt’s second term, the president almost closed the RFC as he pivoted to balancing the federal budget by reining in spending and raising taxes. In October 1936, he ordered Jones to stop all RFC lending. This course along with cuts to public works and relief spending soon pushed the economy back into recession. Six weeks later, FDR was backtracking and the RFC was again lending, investing $1.5 billion into American businesses and recovery initiatives (about $34 billion in today’s dollars).⁴

As Hughes put it in Marketcrafters, the RFC’s “mission was clear: flood hiring-intensive businesses, particularly housing and small businesses, with affordable, abundant credit.”⁵ Home building had been hit hard by the Depression. During Roosevelt’s first year in office, housing starts were only one-eighth of typical 1920s levels. In early 1938, Jones created a new subsidiary of the RFC called the National Mortgage Association (now known as Fannie Mae), which would purchase and hold government-insured mortgages issued by local banks. This gave the local banks more cash with which to write more and cheaper mortgages. More mortgages meant more hiring and more employment.

As Jones explained, “a real building program will increase employment and stimulate business more perhaps than any other one thing that can be done.”⁶ And by 1940, “the total amount spent on housing approached $1 billion, or approximately $264 billion in today’s dollars.”⁷ The RFC also increased lending to small and medium-sized businesses, and between April 1938 and June 1940, it “lent over $214 million, or $57 billion in today’s dollars.”⁸ These measures helped to lay part of the practical financial and institutional groundwork not just for the coming wartime effort but for the housing boom and mass middle-class expansion of the early postwar years.

Remarkably, Jones started out as a small government man. But the rugged Texan was transformed into a New Deal super-functionary by sheer dint of circumstance. Like the other marketcrafters covered by Hughes from later periods, Jones embodied what Karl Polanyi referred to as the “double movement” within capitalist history, whereby economic elites, initially devoted to laissez-faire ideology, push to “disembed” economic activity from social control. They succeed and inevitably create crises, usually in the form of destabilizing inequality and financial contractions. These conditions then generate calls for new protections, redistribution, and all manner of ways to “re-embed” economic activity within moral and legal boundaries.⁹

As Polanyi observed: “While laissez-faire economy was the product of deliberate State action, subsequent restrictions on laissez-faire started in a spontaneous way. Laissez-faire was planned; planning was not.”¹⁰ This pattern whereby free market purists suffering from state aphasia would be forced by historical emergencies to turn back to the organizing power of government would repeat itself in the decades ahead.

A crucial theme touched on but not fully explained is the New Deal’s absolutely essential role in preparing America for the massive military mobilization and industrial expansion of World War II. Without seven or eight years of building up state capacities, it is hard to imagine that the United States could have performed as well as it did when war came.

The RFC presents a perfect throughline from the New Deal to World War II and even into the early Cold War. As the war started, housing and infrastructure funding gave way to armaments. “The RFC funded the construction of 534 new aviation plants and assembly facilities across the country.”¹¹ Many of these plants were publicly owned yet managed by private contractors; others were both owned and managed by the government usually through the traditional federal armories at Springfield, Massachusetts, and Harpers Ferry, West Virginia. Still other RFC munitions factories were leased to companies like Ford. When pilots were needed, an RFC affiliate “outright purchased” more than “sixty private pilot-training schools.” This constituted “a major portion of the nationwide civilian pilot education program that ultimately trained 400,000 pilots by the end of the war half of whom joined the US military.”¹²

But the RFC would not survive long after the war. During the late 1940s, RFC backing of Fannie Mae and the Federal Housing Authority (FHA) meant that it was indirectly funding about half of all residential construction. In the early 1950s, state aphasiacs in Congress, hostile toward successful forms of big government, audited the RFC’s cumulative $40 billion worth of investment over the last thirteen years. They wanted to find discrediting corruption but came up with very little. In the course of the investigation, however, the RFC made one bad loan to a company called Lustron, which had been developing techniques for the mass production of homes. Unfortunately, Lustron mismanaged funds and misled the RFC. This one fumble was used to start rolling back the RFC. After Dwight D. Eisenhower was elected president in 1952, the first Republican in twenty years, he made closing the RFC a priority. It was soon replaced by the Small Business Administration.¹³

Marketcraft Through Boom and Bust

The postwar boom and energy crisis that followed would see the tension between state aphasia and conscious marketcrafting unfold in strange and interesting ways.

As the dust of war settles and the New Deal legacy fades, Hughes’s narrative next moves to the Federal Reserve of the 1950s and ’60s when, under the chairmanship of William McChesney Martin, the central bank became a regular participant in financial markets, indeed, the routine lender of last resort. Like Jones, the man known as “the happy Puritan” originally wanted to do the opposite, but capitalism’s tendency toward crisis compelled Martin to not only intervene but to effectively institutionalize the practice of central bank intervention over the course of his chairmanship.

Coming out of World War II, “nearly 60 percent of the assets on the balance sheet of banks were government debt and securities,” while only 18 percent were private loans. Today, government securities usually constitute only about 10 percent of an American bank’s balance sheet.¹⁴ Bill Martin wanted to significantly reduce government’s role in the credit system. In 1953, he told an audience that the Fed would only intervene in financial markets in cases of real emergency. This was to be a return to older practices. Prior to the war, the Federal Reserve had largely avoided market managing interventions. For example, it did very little during the 1929 crash. But with the bombing of Pearl Harbor, there was a stock market panic, and the Fed immediately stepped in with liquidity to put out the fire. Martin’s plan was to get back to normal.

But a month after Martin’s speech, panic hit the bond markets. The Treasury Department had mispriced a large tranche of long-term bonds. After an initial frenzy of buying, traders started frantically dumping bonds. The terror spread. Martin, very wisely putting aside his ideological preferences, directed the Fed to start buying $150 million worth of short-term Treasury Bonds. The Fed followed this up by buying up another $82 million, and then another $4 million. Finally, the markets began to calm. By 1961, the Fed had launched similar emergency buying operations on four occasions in less than eight years. Thereafter, it was expected that the central bank would intervene regularly to maintain prices and interest rates. The Federal Reserve’s financial market crafting was here to stay.

The 1970s energy crisis that capped the postwar boom was yet another instance of state power being wielded to tame instability and reset the terms of market activity. Hughes’s account of these tumultuous years uses cabinet secretary William Simon as its Virgil. Although Simon would later become known as an ardent libertarian, he presided over some robustly statist interventions during his time as President Nixon’s deputy treasury secretary and then as energy czar when he ran the Federal Energy Office (the precursor to the Department of Energy). In 1974, Simon was appointed treasury secretary, staying and serving through the Ford administration. Prior to his service in the executive, he led bond trading at Solomon Brothers.

Before the 1973 Arab Oil Embargo, fuel prices in America were already set to start rising. During the 1960s, investment in domestic energy production slowed while energy consumption had risen dramatically. Nixon could see trouble brewing in energy markets and wanted to get ahead of things. So he put Simon in charge of the newly created Federal Energy Office and eventually gave this organization cabinet-level power. When Simon took on the energy portfolio, he knew very little about coal mining, oil drilling, power generation, electrical transmission, or any of the activities that drive the energy market. But he learned fast.

The key move Nixon wished to make (even prior to the OPEC embargo) was to remove America’s oil import quota that capped “imports at 12 percent of domestic production.”¹⁵ In late 1972, his administration indeed began easing quotas on certain types of petroleum imports; in May 1973, the quotas were removed entirely. Soon, American petroleum imports would jump by 32 percent, with Saudi Arabia, Iran, and Libya being among the largest foreign suppliers. Energy prices were rising, but not as much as they could have.

And then, fatefully, in October 1973, as if out of the blue, a coalition of Arab states attacked Israel. At first, the Jewish state was on the back foot with Arab armies fighting inside Israel. The Nixon administration rushed several plane loads of crucial military supplies to Israel. The shipments were supposed to be secret, but they were discovered, and this infuriated Arab states across the Middle East. Amid all this, the international oil majors jacked up their prices by 70 percent; they were followed by the Arab members of OPEC who, wishing to punish the West for supporting Israel, started ratcheting up their prices until they were 300 percent higher than before the war. The anticipated energy crisis had arrived.

The Nixon administration, which as early as 1971 had imposed temporary wage and price controls, including on oil, in order to control inflation, now dispensed with any remaining laissez-faire pretenses and began directly managing energy markets. The Federal Energy Office announced immediate reductions in gasoline supplies to retail stations, limited drivers to a maximum of ten gallons of fuel per week, and distributed millions of decals reading “Don’t Be Fuelish” to encourage conservation. “As the holiday season approached, Simon banned outdoor light displays and Nixon decided that the White House would only activate 20 percent of the normal decorations.”¹⁶ Simon also “capped refinery output at 75 percent of its 1972 base, with public transit, the military, and agricultural interests receiving all of their fuel requirements.”¹⁷  In January 1974, Nixon signed the law that made fifty-five miles per hour the national speed limit for passenger cars.

Despite all these efforts, the energy crisis was acute. “By February 1974, 20 percent of gas stations nationwide had no supplies. In Pennsylvania and Florida, it was 40 percent, and in California, half.”¹⁸ The United States at this juncture had no federal government-controlled oil stockpile. The vast Strategic Petroleum Reserve (SPR) would only be established in December 1975. But the U.S. Navy and other government agencies had smaller stockpiles; and under direct pressure from President Nixon, Simon started releasing fuel from these supplies. Soon, the shuttered gas stations began reopening.  Hughes asserts and (is probably correct) that the crisis would have been much worse had the Nixon administration not been so aggressively and intimately involved in guiding energy markets.

President Jimmy Carter would also face an energy crisis starting in late 1977 following the Iranian Revolution, during which most of the that swing producer nation’s oil production went offline, leaving world oil markets with a net 3.5 million barrel-per-day shortage.

The contrast between Nixon and Carter is profound. The Republican Nixon expanded and used state capacities in the face of an energy crisis, while the Democrat Carter reduced government’s role in energy markets when his crisis hit. Hughes does not cover the whole menu of Carter’s deregulations, but they included deregulatory changes to airlines, trucking, railroads, telecommunications, finance, and energy. In March 1979, two years into the collapse of Iranian oil output and one month after Ayatollah Khomeini came to power, Carter issued an executive order that began a phased deregulation of oil prices. If the market was supposed to self-regulate toward equilibrium, something went wrong, for the pain at the pumps only grew worse.

The contrast between Nixon and Carter raises classic questions about structure verses agency. Why did these two men seemingly violate their party’s ideological convictions? How much does the politician actually control the political moment? And how exactly do deeper structural forces limit and shape the choices of a political leader? Despite rising pressure from his party’s right flank, Nixon presided over some of the most progressive regulatory policy changes in American history.¹⁹ This was, of course, the same Nixon who was quoted as saying: “We’re all Keynesians now.”²⁰  No doubt the massive strike wave of the early 1970s, by some measures even bigger than in the postwar labor offensive of the late 1940s, had something to do with this. Within the same decade, Carter launched the first neoliberal salvos, which prefigured the Reagan Revolution.

Central to understanding the energy crisis is the structural perspective, which is overlooked in Hughes’s telling. The energy crisis, and just as important, the profit crisis of the 1970s formed the historical bookend to the New Deal era. While the energy crisis was about a politically engineered shortage, the deeper problem was the exhaustion of the postwar boom and the return of that perennial capitalist problem of overproduction. World War II wiped out capital worth untold billions of dollars and left huge populations with massive pent-up demand. The decades-long rebuilding following the war helped create the voracious demand that could absorb the massive output of the golden age. Most developed capitalist economies saw rising standards of living and healthy profits, even as there were high rates of taxation, expensive and expansive social welfare systems, and burdensome new regulatory requirements for business.

By the late 1960s, however, world markets were becoming oversaturated, as there was finally too much productive capacity and not enough demand. Average after-tax profits began to sag. In many countries, organized labor was strong enough to resist downward pressure on wages. An inflationary wage-price spiral set in through the next decade, with the deadlock finally being broken by a wave of brutal austerity; call it “marketcraft with antisocial characteristics.” And though the state would continue to pursue this version of marketcrafting for the benefit mostly of big financial actors, the ideological consensus would move in the direction of what might be called “advanced state aphasia.”

“State Blindness for Thee, But Not for Me”

For the first half of the book, marketcraft is established as an implicitly positive force, a kind of center-left economic statecraft in service of the greater good. But by the time we get to the chapter on the Volcker Shock of 1979 to 1982, and the muddled role of borderline dissident Nancy Teeters, the first woman appointed to the Federal Reserve Board, marketcraft comes into focus as sometimes profoundly destructive of any progressive notion of the greater good.

Paul Volcker infamously crushed the inflation of the 1970s by plunging the American economy into what was then the worst recession since the Great Depression. In the process, unemployment reached more than 10 percent. Volcker’s monetarist squeeze, plus Ronald Reagan’s deregulation and regressive tax cuts, greatly increased American class inequality. It also helped break unions, drove deindustrialization, and facilitated financialization. Volcker’s brutally high interest rates also helped trigger the Third World Debt Crisis that first brought Mexico, Brazil, and Argentina to the brink of default and opened the way for forced free-market economic restructuring all across the Global South.

The Volcker Shock might have ushered in decades of social disaster. Yet by its own standards, the project worked. His “cold bath” recession beat inflation and helped restore profits. A Volcker quote not used in the book but worth knowing says it all. Defending his belt tightening to the New York Times in October 1979, Volcker explained that: “The standard of living of the average American has to decline. . . . I don’t think you can escape that.”²¹

Not all monetarist Fed chairmen are so lucky as to get what they want. Alan Greenspan was an avid marketcrafter with big plans and theories, but they blew up in his face. Well known as a former devotee of Ayn Rand, Greenspan thought “the government’s purpose was to leverage its power to unlock these self-regulating tendencies. The Fed’s job, the mission of its marketcraft, was to encourage, embrace, and celebrate financial innovation’s ability to make markets more flexible and efficient, unlocking their natural potential to self-regulate.”²²

This meant Greenspan was not afraid of the occasional massive government bailout. Indeed, he started bailing out the financial sector mere weeks after becoming Fed Chair. On Monday, October 19, 1987, the stock market went into a tailspin. Greenspan immediately assured the world that the Fed would “serve as a source of liquidity to support the economic and financial system.” In 1989, in the wake of the savings and loan crisis, Greenspan did more of the same, working with the George H. W. Bush administration to produce what was then the largest financial bailout in U.S. history at $90 billion. In 1994, the Fed and Treasury joined the IMF in hustling up $47 billion in emergency lending to save Mexico from default, for the second time in less than fifteen years.

“As crises accelerated,” explains Hughes, “Greenspan became so active in the work to stabilize markets that investors gave the new approach a name: the ‘Greenspan Put.’ In finance, a put option guarantees to a seller that there is a floor below which an asset cannot fall in value. Greenspan had used government to subsidize markets so often and forcefully that investors now named a no-cost public sector macroeconomic insurance policy after him.”²³ Libertarian in theory, Greenspan practiced a type of socialism for reckless speculators in practice. His was a “two-step approach to encourage financial innovation”: aggressive deregulation, followed by measures to socialize the ensuing catastrophe.²⁴ Greenspan can thus be regarded as probably the fullest personification of state aphasia and the Polanyian double movement.

Unusual in the history of Fed chairs, Greenspan also liked to run his mouth. He publicly advocated tax cuts, Social Security privatization, and all manner of financial experimentation. When President Bill Clinton took office, Greenspan went to the White House and bamboozled the impressionable Democrat into abandoning any attempt at expanding the social safety net and instead persuaded him to embrace austerity. Greenspan also spoke in favor of credit default swaps and special purpose vehicles, both of which contributed to the Crash of 2008. The idea was that by moving liabilities off the books so as to avoid violating capital requirements, while also slicing and dicing various forms of risky investments and mixing these with less risky investments, banks could provide ever more credit and produce ever more economic growth; they would then be able to do all this with a type of private sector insurance against default. In reality, the opposite happened. When the moment of panic came, the risk was so widely spread that investors had no idea what assets were actually worth. The bottom fell out of the markets. And once again, a type of reluctant cryptosocialism for the rich saved the day, carried out by totally reluctant marketcrafters who are pragmatically compelled by crisis.

Hughes’s discussion of the 2008 crash is very well done. As many will recall, when global financial markets began to melt down, the hitherto laissez-faire Republican administration of George W. Bush was forced to abandon its ideological state aphasia in order to partially nationalize the U.S. banking system. With help from Congress, Treasury would administer the $700 billion unlocked by the Trouble Assets Relief Program (TARP); this was public money deployed to buy up increasingly worthless and distressed “toxic” assets. Perhaps even more disturbing for these libertarian true believers, when all the assets were finally resold eight years later, the TARP ended up making $20 billion in profit for the federal government.

The rescue of 2008 was astounding but absolutely necessary. The international financial system would have melted down had Treasury, the Fed, and eventually Congress not come to the rescue. But the bailout was also deeply unfair because it did almost nothing for homeowners facing foreclosure, nor much for the roughly fifteen million people who were unemployed by October 2009. Nor did the bailout and partial nationalization come with sufficient re-regulation or restructuring of the grotesquely metastasized financial sector that had caused the collapse.

In hindsight, it is also now clear why the recovery turned out to be so lopsided, and that is the large working-class-shaped hole in the political process that gave rise to the bailout; whereas previous eras had vibrant working-class forums and institutions to filter the perspectives and demands of its mass constituencies upward to the national policy conversation, post-Reagan America had nothing of the kind, or at least only faint echoes.

MAGA Marketcraft

The unevenness of the recovery, the persistence of material inequality and social dislocation, the continued hollowing out of industry by way of Wall Street-led asset-stripping and financial consolidation, and the deep cultural alienation of working- and middle-class Americans all led to the rise of Donald Trump in 2016.

The story is, of course, well known to the readers of this journal. And one may go into this part of Marketcrafters wondering how Hughes would treat the most recent hinge point in the political economy story, at which neoliberal globalization was most threatened rhetorically—even if the unreconstructed Reaganism of the national Republican leadership meant that neoliberal policy outcomes (like corporate tax cuts) would continue.

But like a deft party host steering guests away from a sloppy drunk, Hughes politely detours around the first Trump administration. MAGA appears only as a menacing specter threatening the main protagonists from the edges of the narrative. In Hughes’s telling, the first Trump administration is most notable for being the years when the best in the brightest went off to lick their wounds and have a big, long think. The book’s focus shifts to people like Brian Deese, an Obama staffer, and Jake Sullivan, who eventually became Joe Biden’s national security advisor; and to locations like the New America Foundation, Deep Springs College in Colorado, and the Airlie Conference Center in rural Virginia.

The omission of the first Trump administration is unfortunate because, in reality, Trump (the residual neoliberalism of the Ryan-Pence camp notwithstanding) attempted his own version of populist marketcraft. There was: the scrapping of Obama’s Trans-Pacific Partnership; the renegotiation of NAFTA; levying 18 percent tariffs on China; the failed attempt to keep Carrier from moving its Indianapolis-based manufacturing operations to Mexico; the CARES Act in the opening months of the Covid pandemic; Operation Warp Speed; and two rounds of Trump-endorsed “stimmy checks.” And what about the economic nationalism embodied by chief strategist Steve Bannon and his constant invocation of the “working class” and the “ruling class”? Bannon is mentioned only once in passing. Hughes avoiding Trump is, as the poker players would say, a “tell.”

Democratic thought leaders seem to have difficulty reckoning with Trump. As a result, they are at a tremendous disadvantage. If liberals and leftists did pay attention, they would discover a discourse that includes substantive, if often crudely articulated, class critique. And at a time when the labor movement is at an historic low point in terms of membership and influence, and when members of labor unions are increasingly drifting toward the MAGA camp (as evidenced by the non-endorsement of Kamala Harris by the Teamsters last year), the case for taking MAGA-derived notions of class politics seriously becomes even more urgent.

But isn’t MAGA populism all hypocritical posturing, part of a bait and switch? In many cases, yes. Yet, if one’s mission is to truly understand why the populist enemy appeals to voters, especially the kinds of working-class voters Democratic strategists claim to want to win back, thought leaders of the center-left should probably engage with what they say. Alas, the truth that few will admit is that most liberals and leftists refuse to expose themselves to right-leaning intellectuals because they fear moral contamination.

By this point in Marketcrafters, the text has devolved into summaries of resume highlights; an airy celebration of what a droll Irish friend dismissed as “happy people and their meaningful jobs.” And as stories of successful ladder climbing proliferate, consideration of the real economy, specific industries, supply chains and places, are increasingly pressed out of the narrative. Instead of a serious discussion of late-stage, deindustrialized, financialized America, we get chatty, glossy, bowdlerized little hagiographies of beltway policy wonks, ideas they come up with, and the policy plays they run.

Discussion of the Biden years culminates with the CHIPS Act and the Inflation Reduction Act (IRA). But alas, the story is all about how the legislation was passed. There is not much about the sectors of the economy targeted for transformation. Climate change and clean energy are constantly invoked. Yet the chaotic patchwork of totally deregulated and still regulated economic arrangements that are the American electrical grid get no discussion. In fact, the power grid, which should lie at the heart of any real climate policy, is mentioned only once. Same goes for discussion of the CHIPS Act. The story is all about the dealmaking in DC. “Even though the semiconductor legislation had originated with Republicans in 2019, Deese and other Democrats could see the substantive opportunity to craft a critical market.”²⁵

Somewhere beyond the Potomac lies the real world, but the book never really takes its reader there. Biden’s CHIPS Act and IRA were both significant moves toward industrial policy. But their treatment in Marketcrafters is underwhelming and, frankly, trivializing. Also overlooked is the Covid pandemic, a marketcrafting event if there ever was one.

There is one odd exception in this collection of center-left luminaries, and that is the conservative Republican founder and editor of this journal, Julius Krein. As a civilian employee of the Department of Defense, Krein’s mission in Afghanistan was to help turn the eastern city of Herat on the Iranian border, into a tech hub. But Afghanistan in those days was an out-of-control, profoundly corrupt, narcostate where all such well-intended efforts were, when viewed from the ground, ridiculous.²⁶ According to Krein the effort “was a complete disaster,” and yet it was “packaged as a great triumph of American foreign aid and capitalism and free markets.”²⁷ Suffice it to say, Hughes likes Krein, American Affairs and the questions it explores.

At the very least, one of the central questions explored by this journal—how the state can harness the market toward strategic economic outcomes—has become more and more a preoccupation among Republicans and Democrats alike, indicating that the days of the neoliberal dispensation, though it might persist through sheer inertia and elite greed, are numbered. As their political visions gradually converge on the generational challenge of industrial policy, American policymakers may begin to see the state again, in all its potential creative power and utility.

Finally, there is one more problematic omission in Marketcrafters, and that is the challenge of China. The end of our state aphasia owes much to the Chinese example, which has demonstrated the utility of proper economic planning. China does get a few pages, but a book covering this same historical arc that was centered on structural forces rather than personalities would have the rise of China as a guiding theme for its entire last third.

China has also made clear, for those willing to pay attention, the absolute importance of geography and culture. Take, for example, the current lesson being administered: China’s export ban on rare earth elements. These highly conductive and magnetic metals are needed to build everything from iPhones to medical equipment to fighter jets.

Donald Trump would love nothing more than to dominate China. But he can’t. Because China controls around 90 percent of the planet’s rare earth elements supply; for the three heaviest of these seventeen elements, China, along with its allied neighbor Myanmar, controls 100 percent of global mining and refining capacity. Back in 1992, Deng Xiaoping said “The Middle East has oil, China has rare earths.” The Chinese state has guarded these resources realizing that, if necessary, they could be weaponized.

As soon as Trump returned to office, Beijing quietly announced an export ban on rare earth elements and several other closely related magnetic and conductive metals like gallium and germanium. This put American industry in a very difficult position. While the United States has deposits of some of these elements, we do not have all of them. More importantly, we allowed financial innovators to close down our rare earth mining and refining capacity because these resources could be more profitably produced elsewhere. Politics, geography, and state security were readily sacrificed to the myth of global market integration. Thus, the United States is now in a frantic rearguard effort to rebuild its rare earths supply chains.

As a result of China’s new restrictions on the export of rare earth elements, the Trump administration has been kicking the can of Chinese tariffs down the road by way of a so-called tariff cease-fire that has, so far, been extended twice. The president recently conceded that tariffs are “not sustainable” because China has so much of what America needs.²⁸ Clearly, biography, which guides Hughes book, is important, but it has limits. More importantly, it would seem, there are facts on the ground and, indeed, things in the ground.

This article is an American Affairs online exclusive, published November 20, 2025.

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Notes