The world today is undergoing changes unseen in a century, with turmoil and disorder intertwined. The Russia–Ukraine conflict drags on, the Israel–Palestine conflict remains unresolved, the United States forcibly abducted Venezuelan President Nicolás Maduro, and the United States and Israel have launched military actions against Iran. Most people are familiar with the relevant statistics on warfare. Although figures vary across institutions, they are all deeply distressing. According to data from last year, more than fifty countries around the world were involved in armed conflict, with at least 20,000 people dying from war every month.

After returning to the White House for a second term, Donald Trump even raised territorial claims over Greenland and Canada. This has led some observers to argue that not only is the Yalta system under severe strain, but even the Westphalian system itself may be entering a state of collapse.

Coupled with the policies he pursued during his first presidency, Trump has actively dismantled many of the rules and institutions that the United States itself helped establish and that, on balance, have served American interests while underpinning the functioning of the global economic and political order.

One cannot help but recall the famous passage:

“All that is solid melts into air; all that is holy is profaned.”

This was how Karl Marx and Friedrich Engels described the transition from feudalism to capitalism in The Communist Manifesto. The hierarchical, fixed structures that sustained feudal society either dissolved into nothingness or were stripped of their sanctity.

Today, however, we are compelled to ask: are the “hierarchical,” “fixed,” and “sacred” institutions that underpin capitalist society also beginning to crumble? Can we pose the question of whether we are living through a transition from capitalism to socialism and communism—and if so, what stage of that transition we currently occupy?

The report of the 20th National Congress of the Communist Party of China stated that the world has entered a new period of turbulence and transformation. My own understanding is that the world is experiencing profound change and profound disorder, with upheaval and instability feeding into one another. To this description, I would add three more words: a profound crisis.

Global capitalism is facing a systemic and institutional crisis. This is no longer merely a cyclical crisis; it increasingly exhibits structural and long-term characteristics. The crisis extends beyond economics and finance to encompass social, political, and even cultural dimensions.

In Capital, Marx wrote:

“The motive of capitalist production is profit-making. The production process is merely an indispensable intermediate stage for making money, merely a necessary evil that must be endured in order to make money. (Hence all nations with a capitalist mode of production are periodically seized by the fantasy of trying to make money without the mediation of the production process.)”

In today’s language, we would call this the shift “from the real economy to the virtual economy.” The sentence in parentheses naturally draws attention to the cyclical nature of the phenomenon. Recently, however, I have been wondering whether it may also point to a deeper structural or long-term transformation within capitalism itself.

In my view, the defining characteristic of contemporary capitalism can be summarized as the rule of financial monopoly capital. Such a system has at the very least become firmly established in the United States and has spread to many other countries as well.

The influence of the major investment banks declined somewhat after the 2008 financial crisis. Today, the most powerful actors are asset-management firms, foremost among them three giants: The Vanguard Group, BlackRock, and State Street Corporation.

Both Vanguard and BlackRock each manage more than $10 trillion in assets. They are the largest shareholders in the overwhelming majority of companies listed in the S&P 500, giving them influence across virtually the entire corporate landscape. Among the five largest shareholders of most S&P 500 firms, it is now difficult to find individual investors. Figures such as Jeff Bezos and Elon Musk are rare exceptions; the rest are overwhelmingly institutions representing financial capital.

Once financial capital gains control over the largest and most strategically important corporations, does it influence their behavior? Some argue that these investments are largely passive, held through mutual funds, index funds, or ETFs. But consider this: if you became the largest shareholder of Microsoft, would you really refrain from participating in management? That is difficult to imagine. In reality, these institutions inevitably become involved in corporate governance and, in doing so, shape corporate behavior.

The result is that, once profits are generated, companies increasingly prioritize stock buybacks and shareholder dividends rather than investment or research and development. Both practices are rooted in the ideology of “shareholder primacy”—the belief that a corporation exists above all to maximize short-term returns for shareholders. As a consequence, companies that were once centered on manufacturing have become increasingly short-term in their outlook, paying less and less attention to long-term development. After all, private financial capital is often driven by the pursuit of quick profits and outsized returns.

This has produced a range of consequences. Boeing provides a particularly revealing example. As one of the two global duopolists in the market for large commercial aircraft, Boeing should have little difficulty securing orders and maintaining profitability so long as it avoids major failures. Yet how did such a company end up producing a flawed aircraft like the Boeing 737 MAX?

The answer is likely inseparable from Boeing’s merger with McDonnell Douglas and the subsequent rise of former McDonnell Douglas executives within Boeing’s management. These executives emphasized the financialization of corporate operations—a strategy that had already contributed to McDonnell Douglas’s decline and eventual acquisition by Boeing. Yet after taking control of Boeing, they continued to apply the same management philosophy. They could not tolerate the engineer-driven corporate culture that had long defined Boeing’s headquarters, and eventually relocated the company’s headquarters to Chicago.

Following the 737 MAX crisis, Boeing moved its headquarters again, this time to Arlington, Virginia. The reason is straightforward: Arlington is close to the Pentagon, and a substantial portion of Boeing’s business now depends on contracts from the U.S. Department of Defense.

Since the 1980s—and especially since the beginning of the twenty-first century—major capitalist economies have experienced a clear trend toward deindustrialization. Looking at manufacturing value added among the world’s leading industrial nations, the traditional industrial powers, including the United States, have all seen their shares of global manufacturing decline. By 2023, China accounted for 31 percent of global manufacturing value added, compared with just 15 percent for the United States, 6 percent for Japan, and 5 percent for Germany.

Although successive U.S. administrations, beginning with that of Barack Obama, have promoted policies aimed at bringing manufacturing back to the United States, the results have been limited. Since the start of the twenty-first century—and particularly since the 2008 financial crisis—American industrial and manufacturing output has failed to recover to its 2007 peak. Productive capacity has shown little growth as well. Personally, I would not rule out the possibility of a precipitous decline at some point in the future.

Today, the United States struggles even with the maintenance and repair of aircraft carriers. This reflects a broader set of underlying structural problems.

Long-term economic stagnation has been accompanied by soaring financial bubbles and an increasingly severe debt burden. On average, government debt in capitalist countries now amounts to roughly 120 percent of GDP. This has created a serious challenge: simply servicing the interest on public debt has become a major fiscal burden for countries such as the United States. In fact, U.S. interest payments on the national debt now exceed its military expenditures.

At the level of social crisis, Western countries including the United States are experiencing an unending stream of social unrest. The main issue lies in widening wealth inequality and increasingly unjust income distribution, which have generated a series of sharp contradictions. In the United States, wealth inequality has reached a historical peak, with the richest 1% of the population now holding more wealth than the entire middle 60% combined. In addition, issues such as illegal immigration, refugees, religion, and race are becoming increasingly intertwined. These problems are likely to push Western societies toward an even deeper crisis in the future.

Western countries are also broadly trapped in a political crisis: political polarization, constant partisan conflict, and a continuous decline in governance capacity, to the point that even actions such as military withdrawals are poorly managed. During the Russia–Ukraine conflict, the bombing of the Nord Stream pipelines further revealed that the United States, as a hegemonic power, is no longer willing to take the interests of its allies into account. It reflects a mindset of “allies are for sacrifice” and “better them than us.” Does this indicate that internal contradictions have already become so severe that the interests of allies can no longer be accommodated?

Perhaps even more far-reaching is a cultural crisis. At present, the dominant ideas, concepts, and theories in Western societies are neither able to explain the current predicament nor offer viable solutions. Looking back at history, China itself experienced a cultural crisis after the 1911 Revolution. Has the West now fallen into a similar condition? Once a society enters a cultural crisis, it may take thirty to fifty years, or even a century, to recover.

Since the 1980s, neoliberalism—promoted by the United States—has spread globally. However, after 2008 it has become unsustainable and has given way to populism, especially right-wing populism, with figures such as Donald Trump and Narendra Modi as representative examples. Yet populism also fails to solve these problems, because no political force dares to harm the interests of financial monopoly capital. Under such conditions, the West is in urgent need of reform—but reform proves impossible. Who would dare to challenge Wall Street? Those who do may at best face impeachment.

The West is now caught in a dilemma of “reform is necessary, yet impossible to achieve.” As a result, all kinds of contradictions will inevitably continue to deepen, intensify, and intertwine. The likelihood that Western countries will continue shifting to the right is extremely high. In fact, in some countries, the influence of politicians and parties with fascist or militarist tendencies is steadily increasing. There is concern that such forces will continue to expand and eventually enter government in several major countries. If this were to happen, humanity could face catastrophic consequences.

Against this backdrop, China’s rise acquires profound global significance. The theory, path, system, and culture of socialism with Chinese characteristics have taken on major importance for the future development of humanity.

In short, human society stands at another crossroads: either it is dragged into the abyss by the logic of capitalism, or it moves toward a socialist path and forges a new way forward, bringing hope for the future of humankind.

Editor: Zhiyu Wang