Prefatory context: this essay continues my ongoing exploration of the dynamics of the present phase of capital accumulation through the lens of fictitious capital, circuits of value flow and thermodynamic and material constraints. It tries to pull some threads together.
The U.S. Congress passed the GENIUS Act this week, heralding the beginning of the next chapter in fictitious capital’s expansion. As it does so, it expresses a condition of our times, which I have described as a financialised psychosis. Set against a long historical backdrop, we can now see how the impending era of American stablecoins backed by US Treasuries heralds not the beginning of the promised land of financial innovation, but consolidates the unfolding of the crisis of western capital accumulation and global dominance.
The chaos we observe is acute because it is the simultaneous occurrence in the west of an over-accumulation of fictitious capital crisis, an energetic degradation crisis and a cultural crisis that can no longer rationalise the detachment of financial wealth from meaningful existence. One now wonders whether a terminal phase has arrived.
Giovanni Arrighi’s The Long Twentieth Century outlines a profound framework for understanding hegemonic rise and decline in the modern capitalist world-system. Each hegemon - Genoese, Dutch, British, and finally American - has presided over a system of accumulation that begins in productive expansion, crescendos into financialisation, and collapses under the weight of its own contradictions. But Arrighi’s framework, while deeply insightful, is incomplete if viewed only through the lens of finance and geopolitics. If we integrate into it the thermodynamic realities foregrounded by the Systemic Exchange Value (SEV) framework that I have been developing, where value creation is ultimately rooted in energy flows and system-level energetic returns, we arrive at a more comprehensive and sobering diagnosis: the West, and the United States in particular is now experiencing decline and undergoing systemic exhaustion.
Financialisation as Terminal Symptom
In Arrighi’s schema, the financialisation of a hegemon’s economy signals not revitalisation but decline. It marks the shift from a regime of material expansion, where value is generated through the production and exchange of goods, to one of financial expansion, in which capital seeks returns through speculation, credit and leveraged claims on future value. Britain experienced this in the late 19th century as the City of London eclipsed its industrial core. The United States has been living through this phase since the collapse of Bretton Woods in 1971.
The Bretton Woods system was the institutional framework that secured U.S. postwar dominance. It established the dollar as the world’s reserve currency, anchored to gold, and underpinned global trade and investment flows. But its collapse exposed a deeper contradiction. It revealed that the American economy could no longer support the financial obligations implied by its global role without detaching the dollar from any material anchor. The age of fictitious capital began in earnest.
Fictitious capital - claims on future value that have no secure basis in productive surplus - has since metastasised into every corner of the U.S. economy. Debt-financed share buybacks, securitised real estate, margin loans, derivatives and, more recently, crypto-stablecoins, all represent new instruments in this expanding edifice of illusion. As finance capital finds fewer profitable outlets in real use value productive activity, it turns inwards, compounding claims on itself, feeding an illusion of wealth disconnected from the real economy.
This is clearly a financial phenomenon though perhaps it is now verging on an emergent civilisational disorder. A system that once grew by producing use-values now survives by circulating symbols; an ever expanding and accelerating network of exchange values chasing exchange values. The logic of finance capital has become recursive, self-referential and ultimately cannibalistic. This is Baudrillard’s simulacra in the economic sphere, a symptom of financialisation psychosis: a mass delusion wherein capital accumulation appears infinite so long as balance sheets are inflated and the illusion of liquidity is maintained.
But illusions must eventually confront the material substrate that sustains them.
The Energy Base: EROEI and the Real Limits of Empire
Underneath the surface of this financial hall of mirrors lies a more fundamental erosion. We are confronted by thermodynamic realities. Civilisations rise and fall not simply on access to capital or markets but on the energy return on energy invested (EROEI) of their core systems of production and reproduction. This is where the SEV framework begins. It starts with the material proposition that energy is the ultimate resource and therefore constraint on all economic and social processes.
The energetic foundations of American power were laid in the age of cheap, abundant fossil fuels. At first it was coal, then oil. U.S. military, industrial and agricultural supremacy throughout the 20th century was underwritten by high-EROEI oil systems, largely domestic in origin, and later globalised through the control of Middle Eastern reserves and petrodollar recycling arrangements.
But that energetic bounty is now exhausted - if not quite yet in absolute terms, certainly in relative terms. Today’s core U.S. energy systems - especially tight oil (fracking) - are no longer abundant. They are increasingly scarce and defined by marginality. The EROEI of fracked oil hovers in the single digits, considerably diminished from the efficiencies witnessed in the early petroleum age. Unconventional sources like tar sands, deep offshore and biofuels fare even worse.
Diminishing EROEI is a real, material constraint. Low-EROEI systems consume more and more energy simply to access new energy. This leaves less net surplus to support non-extractive sectors of the economy. The result is a hollowing out of real productivity, despite nominal (financially denominated) growth. It is no coincidence that the U.S. economy has become increasingly reliant on low-wage service work, debt-financed consumption and speculative asset bubbles.
The American economy is now trying to support a world-spanning empire and a bloated financial sector on an energetic base that is, in thermodynamic terms, slowly collapsing inward. The illusion of prosperity is maintained through credit issuance and financial engineering, but the real, physical metabolism of the system is deteriorating.
The Convergence of Crises
We are thus living through a convergence of structural crises, a toxic and malignant interaction of bloated fictitious capital and energetic emasculation, each amplifying the other. The attempt to sustain fictitious capital valuations through monetary stimulus and asset price inflation increases the system’s exposure to instability and collapse. Yet, even if financial reform were possible, the material base required to reboot productive expansion is no longer present in the core.
This is what makes the current phase different from past crises. During the Great Depression, the U.S. still had a growing industrial base and rising energetic returns to build upon. Today, it has neither. It is managing decline through hallucination.
Meanwhile, the centres of productive expansion are shifting. China, the Eurasian periphery, and the Global South more broadly are investing in infrastructure-led growth, higher-EROEI systems (including coordinated solar, hydro and nuclear - and increasingly in downstream storage including hydrogen), and electrified industrial ecosystems that are more tightly integrated with physical supply chains. These developments are driving geopolitical shifts, and a systemic transformation of global value flows, and their spatial-distributional contours.
The West, by contrast, remains locked in a relatively low EROEI financialised logic. Its policy tools - sanctions, monetary tightening and dollar liquidity traps - are the instruments of a declining hegemon attempting to preserve rentier privileges in a world that no longer needs them.
Toward a Post-Hegemonic Reconfiguration
If we take Arrighi’s full cycle seriously, we must recognise that financial expansion is not a rejuvenation strategy. On the contrary, it is a prelude for system instability and possibly the beginning of chaos. As we stare at emergent chaos we see in effect witnesses to the final phase of this long period of accumulation before collapse or reconfiguration.
Interestingly, whereas earlier hegemons like Britain could offload their decline onto ‘related’ civilisational powers (what has been described as translatio imperii, the present conjuncture seems to speak of something else. Rather than a single civilisation successor ready to absorb the functions of American hegemony, the global system appears to be evolving to a less centred structure; what we have loosely described as multipolar or perhaps, even, multi-nodal.
In this multipolar reconfiguration we see overlapping regional systems, differentiated by energetic profiles, political capacities and civilisational orientations.
Some of these may evolve more ecologically and energetically rational systems of value production that integrate high-EROEI energy with foundational economic provisioning and productive reinvestment. The U.S., meanwhile, appears to be - for the time being at least - trapped in a vortex of low EROEI trajectories and priorities. Yet, at some point, the U.S. will confront something of a fork in the road. It will either fragment or transform. Its present torments in so respects could be interpreted through a therapeutic lens, of a patient struggling with the autoimmune effects of addictions and a realisation that things cannot go on as they have. Grief - at the loss of historic primacy - and the displacement anxieties that this ushers are defining features of the present state of the United States.
Transformation would require a repudiation of fictitious capital, a rebalancing toward material productivity, and a deep energetic restructuring. Deep-seated and entrenched elite vested interests, long ago identified by the likes of C. Wright Mills, would need to be displaced. That’s improbable at the present moment. Fragmentation - perhaps right now, the more likely path - would involve internal disintegration, regionalisation and increasing resort to authoritarian management of decline.
The End of Symbolic Empire?
Paul Virilio’s insight that “the invention of the ship was also the invention of the shipwreck” is a warning not just about technology but about the politics of speed.
In the current phase of fictitious capital psychosis, speed itself has become a systemic imperative. High-frequency trading systems arbitrage milliseconds; financial products are issued at the push of a button; memecoins and stablecoins circulate as hyperfluid claims with no tether to material value. This dromological compulsion - the pursuit of speed for its own sake - reflects a system that must outrun its contradictions. The more fictitious capital detaches from real value productive foundations, the faster it must turn over to remain credible.
Yet the circuits of material transformation, especially energetic production and infrastructural investment, operate on geological and thermodynamic timescales. This introduces a temporal disjuncture between the velocity of symbolic value and the latency of real energetic surplus production. The digitalisation of finance thus creates an illusion of motion and dynamism even as the energetic base erodes beneath it. The result is a system trapped in acceleration without destination. It is a self-referential financial relativism that undermines any stable grounding in the physical economy.
Financialisation today is no longer confined to spreadsheets and markets; it has taken on a cinematic quality. Financialisation is now Hollywood, which lives not only on the screens of cinemas or even the screens of handheld devices as vignettes of entertainment. Hollywood has become the sine qua non of American modernity and soft power. Yet, we now are living through the collapse of a symbolic empire. This empire has been held together by illusions and a Hyperreal Simulacra machine, increasingly detached from productive capacity or surplus energy.
Hollywood is no longer merely an entertainment industry. It is the aesthetic infrastructure of American financial capitalism. Its dreamscapes of limitless wealth, boundless power, technological omnipotence and perpetual motion are not passive reflections of a society but active components in the soft power apparatus of fictitious capital. They provide the necessary myths that animate investor sentiment, consumer fantasy and - for many decades - geopolitical legitimation. Hollywood is not just on the screen; it is the screen through which the world sees the United States. Rather than the grungy streets of LA, pock-marked by homelessness and opioid abuse, we see a simulacra that is glossy, hyperreal and ideologically seductive. It is the central node in a symbolic empire, churning out narratives that form signs that circulate as value themselves, reinforcing the semiotic scaffolding of Wall Street, Silicon Valley and the dollar’s global dominance.
But this symbolic empire is now collapsing under the weight of its own hyperreality. Fictitious capital is the economy of signs par excellence; it is a recursive game of valuation where value is conferred not by underlying substance but by narrative, branding and virality. In this world, the memecoin and the Marvel franchise operate by similar logics: the generation of belief through repetition, spectacle and the suspension of disbelief. Yet, as Jean Baudrillard warned, a system of signs untethered from the sacramental order of reality eventually enters a state of simulacral implosion, where signs no longer refer to anything but other signs. The meme coins reference other memes - the language of ‘trading pairs’ links fictions to the conceptual register of value exchange. In this world, the real, the material and the productive disappear. These no longer form the foundations of a functional political economy or social settlement.
This is the ouroboric stage of symbolic capitalism: a snake devouring its own tail, chasing momentum with no destination. In its desperation to sustain motion, in the name of ‘liquidity’, the system cannibalises its own myths, producing spectacle as a substitute for energetic surplus, thrives on short-lived hype in lieu of the grind of use value production and rests on cinematic value in place of energetic value. The symbols that once projected power now conceal decay. Oh, how the worm turns. And like all great empires of illusion, it ends with entropy.
The U.S. hums away on the illusions of infinite credit, eternal liquidity and technological transcendence. But the real world - the thermodynamic, material world - has returned with a vengeance. The SEV framework, when coupled with Arrighi’s longue durée articulation, reveals the features of American decline that underpin our present conjuncture. Perhaps, just perhaps, the age of fictitious capital psychosis is drawing to a close. What follows is not yet clear. But it will not be determined by interest rates or financial sentiment. It will be decided by the physics of energy, the logic of systems and the moral economies that govern what we value, and what we are prepared to leave behind.
This moment of (western) civilisational unraveling represents the end of a hegemonic cycle, and portends the culmination of a deeper dialectic of illusion and power. Adorno and Horkheimer’s warning that the culture industry renders the public passive, reified and incapable of critical reason now finds its highest expression in the digital aesthetic-financial complex. In this complex images, symbols and market signals function as ubiquitous veridictions, blurring our relationship to the real world and with each other into a single stream of administered commodified unreality.
Baudrillard once anticipated that the age of simulation would replace substance with reference loops; and that this dynamic would persist until society lost the ability to distinguish the real from the representational. Arrighi showed us that financialisation marks the twilight of hegemonic power. We are, perhaps, watching the ‘last hurrah’; the one last grab - a frantic attempt to profit from capital’s own past expansion. The SEV framework adds to the diagnosis, by reasoning that there is no longer enough surplus energy to support even the machinery of the spectacle itself. The circuits of symbolic exchange spin faster and faster, unmoored from physical production and energetic grounding, until they collapse into entropy. In this final stage, the West confronts not merely the exhaustion of empire, but the exhaustion of the very conditions that once made symbolic empire possible. It is the spectacle devouring itself. It is the collapse of belief, of energetic surplus and of meaning.
The reason it’s feeling very messy is that this is taking place all at once.